Sugar export: sugar mills wait for prices to firm up before filling their export quota

After pledging to supply three quarters of the allocated sugar export quota, India sugar factories keep the remaining portion expecting sweetener prices to rise.

Export prices are down about 3-4% from their peak, after India allowed shipments from Nov. 5 following a tumble in global sugar futures prices.

Although current export prices are still 12-13% higher than domestic market prices, millers are in wait-and-see mode as there are still five and a half months to export the allocated quota.

Global sugar futures fell slightly as production from Brazil is expected to be higher than expected. However, it is still unclear whether the downward trend in the international market will continue for a longer period, traders from multinational trading houses said. This is reflected in the still bullish sentiment of Indian export trade. The Indian government announced in November a quota of 6 million tonnes of sugar for exports. Some shortage of supply in international markets has resulted in a high premium for Indian sugar.

Compared to the ex-factory price of Rs 33/kg in domestic markets, the export price for the same sugar had peaked at Rs 40/kg, 21% higher than local prices. The high prices had caused some sugar mills in default on their export contracts signed before November at lower rates.

Currently, exporters are offering Rs 37-39/kg. “However, after seeing the price of Rs 39-40/kg, the millers are now holding onto the remaining quota expecting to be higher than the last traded price,” a trader from a multinational export house said. , who did not want to be named because he is not authorized to speak to the media.

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