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Sugar exports may shrink more as domestic prices head north

Sugar exports may shrink more as domestic prices head north
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First Published: Wed, Sep 10 2008. 10 30 PM IST
Updated: Wed, Sep 10 2008. 10 30 PM IST
New Delhi: India’s sugar exports in the next crop year are likely to fall below earlier forecasts of 1 million tonnes (mt) because of rising local prices, which have prompted a coastal refinery to import raw sugar, traders and mill owners said.
Exports from India, the world’s biggest producer after Brazil, for the crop year that ends this month are forecast to surge to a record 4.5mt. But they will dip in the new season as export subsidies end this month and with output likely to fall to about 20mt from 26.3mt in 2007-08.
Rising local prices have made the landed price of Brazilian raw sugar cheaper than domestic supplies, said Narendra Murkumbi, managing director of India’s biggest refiner, Shree Renuka Sugars Ltd.
Murkumbi said his company had imported 33,000 tonnes of raw sugar from Brazil in the past two weeks and may import again, but trade officials said Shree Renuka Sugars may be the only company that imports raws.
“We should not view this (Shree Renuka’s imports) as a trend. I do not foresee any imports by other mills in 2008-09 due to sufficient stocks,” said Vinay Kumar, director general of the National Federation of Cooperative Sugar Factories.
Analysts said the company’s coastal location made imports more attractive than for other mills. Kumar said opening stocks on 1 October would be 11mt, domestic consumption was estimated at 22mt , output was seen at around 20mt and exports were likely to be less than 1 million tonnes.
“If global prices touch $450 a tonne from about $390 now, we may see some good export realization,” he said.
Murkumbi said most of the exports in coming months would be by mills that imported raw sugar duty-free in 2005 against an obligation to export white sugar in the next three years.
“There are some companies that have obligations to export under advance licence and they may export to fulfil that. That will amount to only about half a million tonnes. Other than that, I do not see exports happening,” Murkumbi said.
Shakti Sugars Ltd chairman M. Manickam also expects exports to dip. “I expect shipments of less than 1mt in 2008-09.”
India’s sugar output is set to fall to around 20mt in the year from October as the sharp fall in prices after two years of bumper output encouraged farmers to shift to other crops.
Last year, India entered the raw sugar export market by selling to Dubai’s Al Khaleej, the world’s largest refinery, which was buying raws from Brazil.
Industry officials say this crop year India has exported 1.5mt of raws to the West Asia.
Swelling stocks in the past two years encouraged India to announce freight subsidies for exports, evoking protests from Brazil, Thailand and Australia.
In February, the Union government said the freight subsidy would expire in September 2008 instead of April 2009.
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First Published: Wed, Sep 10 2008. 10 30 PM IST