Financial Daily from THE HINDU group of publications
Saturday, Aug 23, 2003
Agri-Biz & Commodities
Industry & Economy - Exports & Imports
Bangla buys sugar from UP, Haryana mills
New Delhi , Aug. 22
THE Bangladesh Government's decision to resume private sugar imports has opened up a new window for Indian sugar, with private factories from Uttar Pradesh and Haryana seizing the initiative and emerging as exporters after a long period.
UP mills, which include Balrampur Chini, the K.K. Birla Group, Dhampur Sugar, Daurala Sugar Works of Mr Tilak Dhar, Siel Ltd and Triveni Engineering, and also Mr Ranjit Puri's Saraswati Sugar Mills at Yamunanagar in Haryana, have tied up for contracts of one lakh tonnes (lt). The shipments are in the process of being despatched from the Visakhapatnam, Kakinada and Tuticorin ports, according to sources.
Bangladesh had, in April this year, suspended sugar imports, after having allowed imports in September 2002 by private parties in place of the parastatal, Trading Corporation of Bangladesh. Following this, domestic sugar prices rose from 27 takas to over 40 takas.
``We entered into the contracts in anticipation of the lifting of the ban, which was inevitable,'' a UP miller said. A notification to this effect was issued by the Bangladesh Government on Thursday. The miller claimed that the contracts were struck at around $215 per tonne free-on-board, at a premium over the corresponding October futures quote of $198-200 per tonne for London No. 5 white sugar.
``Normally, Indian sugar fetches a discount vis-à-vis London quotes. But this time around, our sugar is selling at a premium because we are offering to supply sugar much ahead of Brazil or Thailand,'' he added.
During the 2002-03 season (October-September), India is expected to export 17-18 lt, of which the bulk (10 lt) will be accounted for by mills in Maharashtra, with the rest going from Gujarat, Tamil Nadu and Karnataka. Mills in the north have not exported much, but are now planning to ship up to five lt to Bangladesh, besides Indonesia and Malaysia.
Although the sugar is being exported at a premium, the strong rupee means that the net ex-factory realisation works out to below Rs 1,000 per quintal, way below the prevailing domestic prices of Rs 1,275-1,300 per quintal. ``Considering that domestic prices have firmed up in the last couple of months, we are exporting at a loss. But then, we have no alternative because the current uptrend in domestic prices cannot be sustained without disposal of stocks through exports,'' the miller said.
Analysts say that the country would need to export at least 30 lt in each of the coming two seasons to bring in a proper semblance of supply-demand balance. Exports from Maharashtra were, till recently, taking place because domestic prices had crashed to about Rs 1,000 per quintal and the State Government was providing an export subsidy of Rs 100 per quintal. With domestic prices going up to Rs 1,275-1,300 per quintal, the mills are no longer queuing up to export.
On the other hand, mills in States like Andhra Pradesh have throughout preferred to sell their sugar in Kolkata and other deficit eastern markets, where prices are ruling at Rs 1,400 per quintal.
``Exports have to be given national priority and every mill should set aside a certain quantity for this purpose. Unless this happens, the present comfortable domestic price situation will change, once crushing for the new season begins,'' the analysts pointed out.
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