New Delhi: Government could decide to allow more sugar exports at a meeting later on Thursday, food minister K.V. Thomas said, after industry calls for extra sales over the 500,000 tonnes allowed under Open General Licence (OGL) in December.
India, the world’s top sugar consumer and biggest producer after Brazil, had stocks of 23.26 million tonnes on 1 June, well above last year and at least a year’s supply, and sugar mills have sought permission to export an extra 1.5 million tonnes.
“Today we are meeting to discuss whether to allow more sugar exports,” Thomas told reporters.
The panel of ministers which is meeting later Wednesday is empowered to take a final decision on the matter.
Indian Sugar Mills Association, a leading trade body, said last week further exports should be allowed to stabilise fallig domestic prices and take advantage of rising global levels.
International prices have been climbing on worries about output from Brazil, the world’s biggest exporter with overseas sales of 28 million tonnes in 2010/11. The benchmark contract on the international ICE exchange has climbed 33% over the past seven weeks and was up 0.51% on Thursday.
High stocks in India could mean the government may allow some extra quantity of sugar exports beyond the permitted quantity under OGL, despite a downward revision in the vital monsoon rains earlier this week.
Farmers had already planted an extra 4.6% of acreage to a total 5.1 million hectares for the current crop year as the monsoon rains started.
Until 22 June , monsoon rains were 11% above average and well-distributed over the major cane growing areas of south and western India. But on Tuesday, the weather office lowered its forecast for the rains to just below normal.
Monsoon rains could still pick up after 15 July, during the key planting month for rice, sugar cane and corn.
“We will also discuss whether there is need to remove stock limits (for traders) on sugar,” the minister added.
The stock limits were imposed in 2009 to tame high food prices triggered during that year’s severe drought.
Sugar futures in India had risen on Wednesday nearly two percent on market talk the stock limits could be removed. By 12:50 pm on Thursday, the most active July contract was up 0.5% to Rs 2,616 per 100 kg.