The Indian sugar sector is likely to benefit from an upsurge in exports emanating primarily from an output squeeze in two major sugar-producing countries of Brazil and Thailand.
The estimated dip in their sugar output has prompted several global agencies, including the International Sugar Organisation (ISO), to project a higher sugar deficit of 4-5 million tonnes (MT) in the 2021-22 sugar season (Oct-Sep).
According to the sugar industry sources, the international sugar prices are ruling at a four-year high at around 20 cents/lb (pound in weight).
Amid reports of lower sugar production in Centre South Brazil in its current sugar season (Apr 2021–Mar 2022) owing to dry weather conditions following drought and also the incidence of frost, the world prices of the commodity are expected to remain bullish.
Moreover, it is reported that Brazil’s next sugar season may also get affected due to the worst-ever drought in that country over the last 90 years.
To add to this situation, sugar production in Thailand, although likely to increase in the next season as compared to previous years, will still be lower than its normal production of 14–14.5 MT by almost 3–3.5 MT.
“Since Thailand sugar would come into the market only after January 2022, it would mean that Indian sugar mills have a good opportunity to export their surplus sugar in the next couple of months up to January 2022, and thereafter till April 2022 before Brazilian sugar hits the shelves,” sources added.
It is also reported that many sugar mills have signed forward contracts for export in the upcoming season. Therefore, it is expected that the Indian mills will avail of this opportunity and be able to ship nearly 6 MT of sugar in the next season also.
According to port information and market data, about 6.67 MT of sugar has been physically shipped out of India in the first 11 months (Oct-Aug) of the current 2020-21 sugar season. This is 1.1 MT more as compared to 5.578 MT exported during the corresponding period last season.
These exports also included 449,000 tonnes of exports under the Maximum Admissible Export Quota (MAEQ) scheme of 2019-20, which was extended up to December 31, 2020.
This means 6.221 MT of sugar was physically exported during Jan-Aug 2021 period, mostly under MAEQ of 2020-21 season and some quantity under the open general license (OGL).
Further, as on Sep 6, 2021, another 229,000 tonnes of sugar was at ports, either loaded onto vessels or in the warehouses waiting for empty vessels to arrive. Considering that 20 days are still left in the current season, total exports in the current season could cross 7 MT.
Indian sugar has been exported mainly to Indonesia, Afghanistan, Sri Lanka, Somalia, UAE, China, Saudi Arabia, Sudan etc, with Indonesia leading the pack with 29 per cent share followed by Afghanistan at 13 per cent.
Of the total exports so far, about 3.428 MT of raw sugar, 2.566 MT of white sugar and 188,000 of refined sugar have been delivered or moved for exports by mills. Additionally, mills are reported to have delivered 717,000 tonnes of raw sugar to port-based refineries for refining and exports.