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India's sugar export restriction a mere process, little impact seen on prices; say experts

26 May 2022 5:01 pm
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Mumbai, 26 May (Commoditiescontrol): India's decision to impose restriction on sugar exports is seen by experts as a mere process based approach which is unlikely to cause wide fluctuation in the sweetners prices too soon.

“The export expectation from the country for the on-going season was expected to be in the range of 9-9.5 Million Tons so what the government now has put in place is only the process and procedure whereby from 1st June 2022 permission is required to be taken,” said Raj Vyas, Portfolio Manager, Teji Mandi.

According to Vyas, the government statement suggests that sugar mills will need to take permission from the government to export sugar. As in any case exports were not expected to be happen beyond 10 Million Tons and the fact that the government is comfortable even at an inventory level of 6 Million Tons by end of September 2022.

“The Indian Government's decision of limiting the export of sugar to 10 MT is not very surprising,” said D.R.E Reddy, CEO and Managing Partner, CRCL LLP. He went on the explain, “The move comes on the backdrop of rising inflation and is made to keep on the rising domestic food prices”.

This decision follows earlier step of banning wheat exports. Reddy, expects the decision will impact the global sugar supply as India is the second-largest exporter of sugar after Brazil. However, he is not willing to forecast price movement. “It is too soon to say if this restriction will have an impact on the pricing in India.”

India imposed restrictions on sugar exports for the first time in six years by capping this season’s exports at 10 million tons, a government order said, to prevent a surge in domestic prices after mills sold a record volume on the world market.

The government has also asked exporters to seek its permission for any overseas shipments between June 1 and Oct. 31, the order said.

India is the world’s biggest sugar producer and the second biggest exporter behind Brazil.

“The government is worried about food inflation, and that’s why it is trying to ensure that enough sugar remains in the country to cater to the festival season,” said a Mumbai-based dealer with a global trading firm.

Exporters also said the decision to allow mills to export 10 million tons would help India sell a reasonably big quantity of sugar on the world market.

(By Commoditiescontrol Bureau: +91-22-40015505)


       
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