|Subject||Sugar Exports From India Slowing As Subsidy Delay Deters Buyers|
Sugar shipments from India, the second-biggest producer, have slowed after domestic prices climbed to a 15-month high and as a delay in announcement of export incentives deters traders, the largest refiner said.
Exports may total about 300,000 tons in the six months through September, compared with 1.5 million tons in the prior six months, Narendra Murkumbi, managing director of Shree Renuka Sugars (SHRS) Ltd., said in a phone interview on May 5.
Lower than expected shipments from India may support prices in New York amid forecasts for the first global deficit in five years amid dry weather in Brazil and Australia. India announced a subsidy for raw sugar exports in February to help mills clear dues to farmers after stockpiles jumped to the highest level in five years. The incentives spurred a rally in local prices above global rates, turning away potential importers.
“I think because of the uncertainty on subsidy there may not be much exports in the second half of the sugar year,” Murkumbi said. “Domestic prices have moved up. So parity is not there anymore. Domestic demand has been quite encouraging this time. It’s definitely firmer than last year.”
The government, which set export incentives at 3,300 rupees ($55) per ton for February and March, has yet to notify the aid for April and May. The delay will keep shipments this season at about 1.8 million tons, Abinash Verma, director general of the Indian Sugar Mills Association, said April 30.
Volatile Prices Prices on the National Commodity and Derivatives Exchange in Mumbai jumped to 3,265 rupees per 100 kilograms on April 25, the highest since January 2013. Futures have since fallen 4.7 percent, trimming gains this year to 10 percent. Prices are 4.9 percent higher on ICE Futures U.S.
“I think there is a lot of weather risks connected to sugar in the next six to eight months,” Murkumbi said. “Sugar could be volatile because of that.”
Sugar output in India will total 23.8 million tons in the 12 months ending Sept. 30, the lowest level in four years, compared with 25.1 million tons a year earlier after excess rains cut yields, the mills’ association estimates. Inventories will drop to about 6 million tons as of Oct. 1 from 9.3 million tons a year earlier, Murkumbi said. Outlook for production next year will depend on monsoon rainfall, he said.
“If there is a surplus there will be exports,” Murkumbi said. “India’s role in the world market will continue to fluctuate. We are very sensitive to the last 3 or 4 million tons of production on the either side.
Source : businessweek.com
We feel pride in offering our customers the wide range of products of the top leading brands of the world.