Agri Business

Change in quality standards brighten prospects of sugar exports to Indonesia

Bloomberg New Delhi | Updated on February 19, 2020 Published on February 19, 2020

Indonesia changed the colour specification for raw sugar imports to allow shipments from India

 

Indian sugar millers, saddled with record stockpiles, are eager to cash in on the prospect of resuming exports to Indonesia after being absent from the world’s top import market for years.

The nation, which vies with Brazil as the top producer, may sell 250,000 tonnes of raw sugar to Indonesia by the end of the local crushing period in May after a change in quality rules by the Southeast Asian country, according to the median of six estimates in a Bloomberg survey of traders and officials.

India is returning to Indonesia after a severe drought cut production in Thailand, usually the leading supplier of raw sugar to the country. The new export market may help rein in India’s ballooning reserves, which surged to a record of more than 14 million tonnes on October 1 after bumper harvests.

This is a golden opportunity for us to export sugar to Indonesia, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd., a producers group. Mills just need to shut white sugar production and start making raw’s in the next two months before the crushing season gets over.

Indonesia changed the colour specification for raw sugar imports to allow shipments from India, Kasdi Subagyono, director-general of estate crops at the Agriculture Ministry said Monday. The government halved the ICUMSA measure to 600, Subagyono said, adding Indonesia needs sugar to meet rising household consumption. While targeted at India, the lower level applies to all suppliers.

The ICUMSA is the International Commission for Uniform Methods of Sugar Analysis. Most Indian mills make raw sugar with an ICUMSA of as much as 800. They could not ship to Indonesia, which had a level for imported sugar of 1,200.

Global Prices

Increasing exports from India may curb the rise in global prices that have surged about 10% this year on concern about production in No. 2 exporter Thailand, hit with its worst drought in 40 years. Sugar exports from the country could drop about 40% to 6 million tonnes, according to one industry estimate.

Export contracts have to be signed quickly for mills in Maharashtra and Karnataka to produce raw sugar before crushing ends in about a month, said Abinash Verma, director-general of Indian Sugar Mills Association.

The U.S. Department of Agriculture estimates that Indonesia, the world’s biggest importer of the sweetener, will buy 4.4 million tonnes of raw sugar in 2019-20.

Indonesian refiners are waiting for an official notification on the ICUMSA rule before entering import contracts with Indian suppliers, said Bernardi Dharmawan, chairman of the Indonesia Sugar Refiners Association, a group of 11 refiners that only process imported raw sugar for industrial users.

Indonesia may buy 300,000 tonnes from India this year, considering inadequate supplies from Thailand, he said, adding actual purchases depend on prices.

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Published on February 19, 2020
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