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Informist, Friday, May 9, 2025

 

By Taniva Singha Roy

 

MUMBAI – After persistent demand to the government to allow exports, sugar millers are now reluctant to sell the sweetener overseas as buyers are not ready to purchase it at the offered prices. Major buyers of Indian sugar are now importing from European countries and other major sugar producers due to cheaper prices, market participants said.

 

Despite sluggish domestic demand amid higher carryover stocks, millers are not selling to foreign buyers as they expect a premium over domestic prices and even the London sugar futures prices, the benchmark rate at which Indian sugar is priced. Millers are only willing to sell at  INR 4,500 per 100 kg or $526.30 per tonne, but there are no buyers at such price levels, said Vinod Kumar Jain, executive director, Deccan Sugar Mills Pvt. Ltd. 

 

Buyers are agreeing to purchase at INR 4,000 per 100 kg or $467.82 per tonne, he said. Currently, refined sugar is trading at $488.5 per tonne  on the Intercontinental Exchange, yet buyers are demanding lower rates as Indian sugar is of cheaper quality. "The Indian sugar is of a bit darker colour and not as refined as the one traded on the exchange," said G.K. Sood, chairman and non-executive director, MEIR Commodities.

 

Against the approved quantity of 1 million tonnes, mills have so far exported 400,000 tonnes of the sweetener and exporters have contracted 250,000 tonnes of sugar from millers, but they are yet to find buyers. About 350,000 tonnes of sugar  is yet to be exported, but there is a high possibility that it will remain in the country, market experts said.

 

In January, the government officially approved the export of 1.0 million tonnes of sugar, to be shipped by September. The approval was given to provide a much-needed relief to sugar millers who claimed to have been grappling with financial instability. The government had in June 2022 restricted exports of sugar owing to concern over domestic availability.

 

 

Along with high prices, a strong rupee is also leading to even lower willingness of the millers to export. "The shortfall in export reflects the reluctance of the factories rather than a formal quota reduction by the government", said Dilip Patil, former managing director of Samarth Sahakari Sakhar Karkhana Ltd. "Exports are slowing down due to high price expectations of INR 45,000 per tonne, a strong rupee and lower futures market prices. With time left till September 2025, it is likely that the full sugar quota will not be exported without government intervention," Patil said. 

 

The rupees has strengthened to 84.83 a dollar, which is also why millers are reluctant to sell at the moment, Patil said. When exports were allowed, rupee had slumped to around 87 a dollar.

 

Moreover, due to logistics expenses millers are not willing to sell at a lower price as it would not be viable. Yet some millers had reduced their quotations to INR 4,200 per 100 kg but there were no buyers at these prices too, Patil said. Major importers such as Indonesia, Bangladesh, Sri Lanka, the United Arab Emirates and a few other African nations are giving preference to other countries for imports. Brazil and also European countries such as Germany, the Netherlands, and France are preferred due to cheaper sugar available in these markets.

 

In addition, the buzz about a hike in the minimum selling price of sugar also kept millers from exporting, as they were of the view that domestic prices will rise when government announces the hike, Patil said.

 

In such as scenario, millers are waiting for domestic demand to pick up and prices to rebound after bottoming out, when they will sell the unsold quantity within the country, Sood said. Currently, prices of the sweetener in the domestic market are around INR 3,830-INR 4,062 per 100 kg and market participants are expecting prices to rise further in the coming days. 

 

HIGH GLOBAL SUPPLY

Higher availability from major producers such as Brazil and Thailand are also dampening the demand for Indian sugar, market participants said. UNICA, a Brazilian Sugar Industry Associate, said that Brazil Center-South sugar production for the first half of April rose 1.3% on year to 731,000 tonnes.  

 

In addition, Thailand's Office of the Cane and Sugar Board reported that Thailand's 2024-25 sugar production rose 14% on year to 10.00 million tonnes. Thailand is the world's third-largest sugar producer and the second-largest sugar exporter. Outlook for higher sugar production in Thailand is bearish for global sugar prices.  

 

The US Department of Agriculture, in its bi-annual report released Nov 21, projected that global sugar production in 2024-25 would climb 1.5% on year to a record 186.6 million tonnes and that global 2024-25 human sugar consumption would increase 1.2% on year to a record 179.63 million tonnes. 

 

Sugar production in India is set to be higher during the next sugar season beginning October owing to abundant rains. On Apr. 15, India's Ministry of Earth Sciences projected an above-normal monsoon this year, with total rainfall forecast at 105% of the long-term average. India's monsoon season runs from June through September. 

 

Globally, too, sugar production is likely to increase. Conab, a Brazilian government agency on Apr. 30, forecast Brazil's 2025-26 sugar production to climb 4.0% on year to 45.87 million tonnes. Signs of a larger global sugar output are negative for prices.  End

 

Edited by Akul Nishant Akhoury

 

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