Maharashtra sugar mills have contracted export deals for white sugar for nearly 2 lakh tonne, senior officials in the trade said. The deals have been contracted for rates between $395 and $410 per tonne, with a majority being with neighbouring markets such as Sri Lanka and Bangladesh, Mukesh Kevadia, secretary-general of the Bombay Sugar Merchants Association, said.
The Centre recently notified the mandatory export of 4 million tonne (MT) of sugar for the 2015-16 season (October to September). The amount will be divided among the mills based on average production through the last three seasons.
The industry welcomed the move, saying that it will help take pressure off prices by reducing domestic stockpiles. It, however, added that it will look to the government “for help” since current prices were unviable for Indian exports.
“In view of the inventory levels with the sugar industry, and to facilitate achievement of financial liquidity, minimum indicative export quotas are being specified for sugar season 2015-16 commencing October 1,” said the notification.
Mills will also be allowed to trade quotas, it added.With sugar output in 2015-16 expected at 28 MT, total supply next season is pegged at 38.2 MT. Domestic demand is estimated at 25.2 MT, which could leave a surplus of 13 MT next season.
According to Kuvedia, it will be difficult to predict the quantum of export since no further subsidies have been announced by the government. “The international rates are volatile and are fluctuating highly and whites are trading between $395 to $495 and at an FOB of $ 400 exports are not favourable and mills are finding it much easier to sell in domestic markets at present,” he said. Moreover, the mills are being pushed to sell in the international market and use the proceeds to clear debts they owe farmers for sugarcane. Interestingly, next year happens to be an election year in Uttar Pradesh so, both industry and traders are waiting to see the developments and incentives coming from the government, industry observers said.
According to senior officials in the industry, contracts are being signed and sugar will mostly move out of Maharashtra, Tamil Nadu and Karnataka with some quotas being offered by mills in the North, because of high transportation costs.
As on October 30, cane arrears in the state amounted to R1,040 crore. Meanwhile, according to Maharashtra sugar commissioner Vipin Sharma, around 114 mills in the state have begun crushing of which 64 are cooperative and 50 millers are private. Around 59 lakh tonne of cane has been crushed so far resulting in 4.3 lakh tonne of sugar at a recovery rate of 8.7%. The state cooperation minister Chandrakant Patil has meanwhile called for a meeting of sugar mills, farmer organisations and Cane Control Board members on November 19 to take stock of the season of 2015-16.