India, the world’s second-biggest sugar producer, will consider allowing mills to export an additional 1 million metric tons next week to ease a surplus, according to an official with direct knowledge of the matter.
Fresh exports are being considered because of a domestic surplus and to allow mills to raise cash to pay cane growers, said the official, who declined to be identified. A panel of ministers headed by Finance Minister Pranab Mukherjee will discuss the proposal on April 25, Food Minister K.V. Thomas told reporters in New Delhi today, without specifying the quantity.
More Indian cargoes may deepen the first global glut in four years, extending a 37 percent decline in futures in New York since a three-decade high in February last year. World supplies are set to exceed usage by 7.7 million tons in 2011-2012, Czarnikow Group Ltd. said March 5.
“Whenever India tries to export it pressurizes prices,” Kishore Narne, head of research at AnandRathi Commodities Ltd., said by phone from Mumbai today. “There is a lot of inventory with the mills, and the cost of inventory is high. Whether global prices are attractive or not, we have to export.”
Raw sugar for July delivery climbed 1.2 percent to 22.83 cents a pound on ICE Futures U.S. in New York by 2:51 p.m. in Mumbai today, while white sugar for August delivery rose 0.7 percent to $601 a ton on NYSE Liffe.
The government has already authorized shipments of 3 million tons in the crop season that began Oct. 1 after production exceeded domestic demand for a second year.
The country may have a further 1.5 million tons available for export in addition to the quantity approved already, the Indian Sugar Mills Association said April 3, urging the government to allow fresh shipments “immediately.”
Mills are seeking approval for additional sales as they need money to pay farmers for cane, according to Abinash Verma, director general of the association. Sugar makers owed growers 84 billion rupees ($1.6 billion) in arrears as of Feb. 29, Thomas told parliament on March 26.
“Exports will offload some inventory and help mills address some short-term cash flow issues,” Narne said.
Shree Renuka Sugars Ltd., the nation’s biggest shipper, climbed 2.1 percent to 33.7 rupees in Mumbai trading and Dhampur Sugar Mills Ltd. jumped 9.9 percent to 46.75 rupees.
Production in India climbed 13 percent to 24.6 million tons in the Oct. 1-April 15 period, the Indian Sugar Mills Association said yesterday.