NEW DELHI – A few cooperative mills in Maharashtra are re-negotiating deals for export of about 50,000 tn sugar as international prices have risen by as much as 20% over the past one month, several industry sources said.
"A few mills are re-negotiating at higher prices after markets shot up tremendously," one of the officials said.
The benchmark front month raw sugar contract on Intercontinental Exchange Futures US rose to a two-year high of 14.90 cents per pound last week, fuelled by the rally in crude oil prices, possibility of lower output and short covering by funds.
The rally made Indian sugar viable for buyers in West Asia and South Asia, propping up domestic prices as well.
Sugar mills that had signed deals at 20-22 rupees per kg in December, when international prices were hovering around 13 cents per pound, now want to re-negotiate the deals, as prices have gone up to 24 rupees, a trader said.
The current prices are quite attractive for mills as the effective price they get on exports after accounting for the subsidy of 10.5 rupees, works out to 34.5 rupees a kg, higher than current ex-factory price of 31-33 rupees for domestic sales.
This rally in prices has given a second wind to sugar exports from India. Mills in Maharashtra are now cashing in on the opportunity, as those in Uttar Pradesh had already sold off most of their export quota, an official with a mill in Mumbai said.
Mills in Maharashtra have so far signed contracts for export of about 900,000 tn sugar, of which 250,000-300,000 tn has been shipped out. The largest sugar producer–Uttar Pradesh–has shipped out about 700,000 tn sugar so far.
Sugar mills in the country are likely to have signed deals to export about 3 mln of the sweetener in the ongoing season, against government's target of 6 mln tn. Of the total quantity, mills have shipped out 1.2-1.3 mln tn so far, trade houses said.