Sugar mills set to sell 1 mt more as exports head for China

Indian sugar mills have contracted to sell one million tonnes of sugar in the 2015/2016 season and expect to sign deals for another million tonnes this season as exports head for China, the president of an industry body said on Monday.

"One million tonnes have been contracted and another one million tonnes will be contracted," Tarun Sawhney, president of the Indian Sugar Mills Association, told a conference in Dubai.

Of the total 1 million tonnes contracted, around 700,000 tonnes have already moved out of the country.

Smuggling

Sawhney said many of the current and future contracts were with Myanmar, where they are expected to be smuggled into China, the world's top importer.

"It will go to China," he said. "The contracts are all through Myanmar and from there it is just being taken upcountry."

The smuggling of agricultural products along China's borders with Vietnam and Myanmar has long been a problem.

China's sugar industry has urged the government to tackle a resurgence in smuggling across the country's southern borders, after huge volumes of cheap sugar were estimated to have illegally entered the country in recent months.

Production

Sawhney also said domestic sugar production would reach 26 million tonnes in the 2015/2016 season, which runs from October to September and would probably see the same figure for the coming 2016/2017 season.

India produced 28.3 million tonnes in the 2014/2015 season.

"It is too early to tell but most likely there will no decrease and no increase," Sawhney said.

"Uttar Pradesh will most likely compensate for the drop in Maharashtra and Karnataka," he said.

The first back-to-back drought in nearly three decades has hit cane plantation in India's key producing states Maharashtra, Karnataka and Uttar Pradesh.

Ethanol blending

One Indian official previously estimated that the drop in plantings for the 2016/17 season means that acreage could fall by about a third after a faltering monsoon damaged thousands of hectares of cane in the world's second-biggest producer.

Sawhney said India would meet its target of blending 5 per cent ethanol in all gasoline sold this sugar year for the first time and surpass it.

"We can cross 5 per cent ethanol blending," he said.

Oil companies have never met the current 5 per cent blending target as ethanol derived from molasses, the thick syrup produced by boiling down sugarcane juice in sugar refining, costs more than gasoline without including taxes.

COMMENT NOW