Indian mills to seek nod for more sugar exports
India’s sugar mills will soon seek government permission to export an additional half a million tonnes of the sweetner as output is expected to rise in the next season from October, the chief of a leading industry body said on Wednesday.
“Now, it makes sense to export another 500,000 tonnes this season,” Abinash Verma, director general of the Indian Sugar Mills Association (ISMA), a producers’ body, told Reuters in an interview.
India, the world’s top consumer of sugar and second-biggest producer after Brazil, has allowed 500,000 tonnes of unrestricted exports, known as Open General Licence (OGL) sales, so far in the current season.
Verma said carryover stocks from the 2010/11 season were expected at five million tonnes.
“When domestic sugar prices have fallen below the cost of production, carryover stocks should not be beyond 4.0-4.5 million tonnes. Otherwise, prices will fall further hurting mills’ ability to pay cane farmers,” Verma said.
He reiterated expectations that India’s sugar output would rise 7.4-9.5% in the new season from October.
“Based on initial estimates of sugar mills, next year’s production is expected at 26.0-26.5 million tonnes, way above our consumption,” Verma said.
ISMA has in the past changed its forecast as the season progresses.
Sugar mills in India are likely to churn out 24.2 million tonnes in the current 2010/11 season, according to ISMA, while government estimates are slightly higher.
Encouraged by strong prices, farmers are likely to plant more cane in 2011/12, leading to a surplus in the next season.
India annually consumes around 22 million tonnes of sugar.