(Reuters) - Indian mills have been contracted to export 50,000 tonnes of raw sugar in the first overseas sale in the season that began in October, two trade sources said, after the government last month approved incentives to boost the trade amid a global glut.
Deals have been signed for prices of $340-$365 a tonne free on board and up to 20,000 tonnes have already been shipped, said the sources, who were directly involved in the contracts. The entire quantity is headed to Africa, one of the sources said.
The start of exports from India, the world's biggest sugar producer after Brazil, could further dampen benchmark prices in New York which on Wednesday touched the lowest level since May 2010 at 13.28 cents per lb.
But so far Iran, India's biggest buyer last year, accounting for almost half of the country's total raw sugar exports of more than 1 million tonnes, has not placed an order.
"Although a beginning has been made in terms of signing export deals, India will find it difficult to sell more than 500,000 tonnes of sugar this year," the first source said.
Indian mills expect a tough time ahead despite government incentives to boost shipments as global prices remain weak with large supplies from top producer Brazil set to flood the market soon.
After months of indecision, India in February decided to give mills a subsidy of 4,000 rupees ($64) a tonne for exports of up to 1.4 million tonnes to help cut stockpiles after five years of surplus output.
Since Oct. 1, 2014 when the current 2014/15 sugar season began, mills have produced 19.4 million tonnes of the sweetener, up from 17.0 million tonnes in the year-ago period.
The Indian Sugar Mills Association, a body of private mills, has forecast this year's output at 26 million tonnes against 24.4 million tonnes the previous year.
Domestic consumption hovers around 23-24 million tonnes, meaning it is common for mills to carry over stocks. Mills had more than 7 million tonnes at the beginning of this season. ($1 = 62.2530 Indian rupees) (Editing by David Evans)