After a record 7.3 million tonnes (mt) exports last season (October 2020-September 2021), Indian sugar shipments will likely face stiff competiton from Thailand this season, industry officials and experts have said.
Exports this year are likely to be six mt, they said, addressing a Webinar organised by Indian Sugar Mills Association (ISMA) - a body of private mills.
“Thai sugar will give competition to Indian, especially due to the high freight differential ($15-$20) for destinations such as Indonesia. India needs to price its sugar to match Thai offers,” said Ravi Krishnamurthy, Head - Indian sugar- COFCO International. Production in Thailand is projected to rebound by 33 per cent to 10 mt this season, he said.
“The world sugar market currently needs India’s surplus and is willing to pay India’s MSP (maximum sale price of ₹31,000 a tonne) to buy its sugar,” said Martin Todd, Managing Director of global agribusiness market and intelligence firm LMC International. But, the current futures price trend indicates the market will not pay the MSP, Todd said.
Another year of deficit
Peter de Klerk, Chief Economist, International Sugar Organization (ISO), said Indian production is likely to be around last season’s level, while an attractive cane price in Thailand is helping the farmers there to switch back to the sweet crop.
After taking into consideration domestic consumption of three mt in Thailand, it would have seven mt of surplus sugar to export. It is expected to export 2.5-3 mt more sugar than last year, COFCO’s Krishnamurthy said.
Thailand left a huge gap in the Indonesian sugar market last season, which was convenient for India but this season, Bangkok will export at least three mt of sugar more than last season. Indonesia will be the natural outlet for Thai sugar, said LMC’s Todd.
India and Thailand, in particular, would be competing for the Indonesia market, which imported 1.7 mt of raw sugar from New Delhi. Besides these two nations, Australia will also compete for market share there, Krishnamurthy said. Todd said Indonesia has continued to source more raw sugar from India following a political agreement covering palm oil and sugar.
Bangladesh will import a good volume of sugar from India, which will be preferred over Brazil in view of high freight rates, the COFCO official said. Last season, Bangladesh imported 2.25 mt of raw sugar from Brazil and India besides one lakh tonnes of white sugar from India. “Due to shorter transit time and freight differential, Indian raws become economically viable for Bangladesh,” Krishamurthy said, adding that the sugar stock situation in Bangladesh remains tight.
However, one feature of sugar exports from India during the current season would be that they will not need any government support since the commodity’s global prices are likely to rule at India’s MSP level.