Agri Business

Sugar: Export to Afghanistan halted but rising prices and demand uplifts industry spirit

Radheshyam Jadhav Pune | Updated on August 23, 2021

Drought in Brazil to impact sugar production

The Taliban takeover of Afghanistan has completely halted sugar export from India with no possibility of export in the coming season. But sugar industry in India is elated with rising prices in the world market and multiplying demand for raw sugar by refineries.

Every year, India exports about 10 lakh ton of sugar to Afghanistan, but all the export will be halted in the coming season. “Last (sugar) season, India exported about seven lakh ton sugar to Afghanistan. But now the export possibility is impossible. In this case, sugar mills will have to look for markets in other countries and we have already issued suggestions to mills in this regard,” said Prakash Naiknavare, Managing Director at National Federation of Cooperative Sugar Factories.

Sugar industry sources said that traders and millers are cautious about export to Afganistan especially after the Indian embassy’s operations are halted.

Sugar exporter Abhijit Ghorpade told BusinessLine that drought in Brazil will have a major impact on sugar production. “The overall sugar production in Brazil is likely to go down by 50-60 lakh ton while production in India is likely to remain the same. The demand for raw sugar by refineries across the world will increase. Refineries from Dubai, Saudi Arabia and also refineries in India are already putting up demand for raw sugar.

Ghorpade said that export to Sri Lanka is also affected due to the dollar crisis that the country is facing. “About 40,000-50,000 ton sugar is exported to Sri Lanka every month. But dollar crisis is deepening there,” he added saying that sugar mills must now focus on raw sugar supply.

Rising prices

According to ICRA sugar export prospects appear encouraging for next sugar season (SY-2022) in light of the recent surge in international raw sugar prices to around US $430/MT (19-20 cents/lb) in August 2021, being the highest levels in past four years.

Even as sugar prices have been trending higher since the beginning of 2021 anticipating a lower global surplus position for the commodity, the recent sugar production data for Brazil pointing to further contraction in the country’s volumes for the season aided in further uptick in international raw sugar prices, ICRA noted.

Sources in the industry said that the industry predicts that the international market price of sugar will cross ₹38,000 per ton in the next few days.

Published on August 23, 2021

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