Commodities

Volatile prices and record Brazilian output pose a challenge to sugar exporters

Radheshyam Jadhav Pune | Updated on January 05, 2021 Published on January 05, 2021

Fluctuation in global sugar prices, cautious overseas traders and record production in Brazil have caused worry among the mills planning sugar export.

“There is good demand for raw sugar in the world market compared to white sugar. The prices of raw and white sugar are almost the same at ₹2,700 per quintal. Mills must increase the export without any delay,” said sugar trader Ashok Ghorpade. He admitted that as rates are fluctuating in the international market, traders are very cautious while signing the deals.

However, experts have warned that mills delaying export will suffer more losses in future. According to Indian Sugar Mill Association (ISMA), sugar mills have the opportunity to contract and export sugar till March-April 2021, by when Brazilian sugar comes into the market. Brazilian sugar production is estimated to be over a record high of 38 million tonnes from April 2021. As a result, the net ex-mill sugar prices for Indian millers will not remain good in future, according to ISMA.

The government recently approved a subsidy of ₹3,500 crore to sugar mills to enable them to export of 60 lakh tonnes of sugar during the ongoing marketing year 2020-21.

Financial crisis

National Federation of Cooperative Sugar Factories (NFCSF) has stated that due to lack of demand, private sugar mills are selling their stock below the minimum selling price of ₹3,100 per quintal. Industry players say that mills are facing a loss of ₹7 after per kg sugar production.

“Considering that the world wants Indian sugar and the fact that sugar production is lower in Thailand, EU, etc, India should be able to export its targeted volumes with the support of the ₹6,000 per tonne of export subsidy during 2020-21,” ISMA said in a press statement.

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Published on January 05, 2021
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