Mumbai / New Delhi: India, the world’s second biggest sugar producer, won’t limit exports of the sweetener to rein in domestic prices that have risen to more than a two-year high in the past two months amid forecasts of a smaller crop.
Low produce: India may produce 22 million tonnes (mt) sugar in the year starting 1 October, matching the country’s annual demand, but that would be a lot less than the 26.5mt output this season. Photograph: Shirish Shete / Bloomberg
“We are not unduly worried and we have enough to keep prices in a certain price band,” Union food secretary T. Nanda Kumar said in New Delhi. “At this stage, no,” he said, responding to speculation that the government may ban sales abroad to curb prices.
Prime Minister Manmohan Singh’s government has restricted exports of rice, wheat, corn and cooking oil to tame inflation that’s at a 16-year high.
Singh faces elections in less than a year and higher food costs can mar poll prospects in a country where more than half the people survive on less than $2 (Rs86.40) a day.
Wholesale rates at Vashi, a Mumbai suburb and the nation’s biggest sugar market, have reached Rs19,730 a tonne, exceeding prices on London’s Liffe exchange, a benchmark for refined sugar. That’s prompted mills to hold off signing new export contracts, Narendra Murkumbi, managing director of Shree Renuka Sugars Ltd, the nation’s biggest refiner, said on 4 August.
“Producers will prefer to sell more in the local market,” said Arhant Jain, executive president (finance) at Dhampur Sugar Mills Ltd, India’s third biggest producer by sales. “Domestic prices are more lucrative today.” India banned sugar exports for six months in 2006 to boost domestic supplies.
Shipments may not exceed 1 million tonnes (mt) in the year ending September 2009, down from 4.5mt this year because of a drop in production as farmers switch to other crops, S.L. Jain, director general of the New Delhi-based Indian Sugar Mills Association, said on Monday.
Exports could range from “zero to a smaller amount” than this year, said Kumar, who is responsible for food policy in the world’s second most populous country.
“If Brazil shifts a little back from ethanol to sugar and if world prices stabilize at current levels, there won’t be much exports.”
Sugar for October delivery climbed 4.2% to 13.67 cents a pound on Monday on ICE Futures US, the former New York Board of Trade. White sugar futures gained 4.4% to $389.50 a tonne in London.
India may produce 22mt in the year starting 1 October, matching the country’s annual demand, down from 26.5mt this season, Kumar said.
Mills will begin the new crop year with an inventory of as much as 13mt, he said.
The government will raise domestic sugar supplies by 500,000 tonnes in August and September to cool prices, PTI reported on 10 August.
“The option of releasing more is always available if the need arises,” Kumar said.