According to the data released recently by ISMA, mills and exporters have, so far, shipped out a record 3.43 Million tonnes of raw sugar in the 2020-21 season, followed by 2.56 Million tonnes of whites and 0.18 Million tonnes of raw sugar, the data also stated that mills have reported to deliver around 0.71 Million tonnes of sugar to port based refineries and export. Indian Sugar exports have seen a major increase from the period of 2017 – 18 to 2020-21 from 0.62 Million to 7.9 Million tonnes. The global sugar prices have increased substantially, and in the event of a huge demand for Indian raw sugar. Export of sugar would help in improving the liquidity of mills, allowing them to make timely payment of cane dues of farmers. It will also make ex-mill price of sugar steady in the domestic market, which in turn will further improve mills sales and solve the problem of surplus sugar.
India’s sugar production for 2020-21 season is estimated at 31 Million tonnes. Acreage under sugarcane this year, according to the latest estimates by Agriculture Ministry’s, it is pegged at 54.70 lakh hectares, about 1.4 per cent higher than corresponding last year’s 53.96 lakh hectares and this production surplus will help exports even more.
Forward contracts are a derivative contract which include buying and selling of an asset/goods in future at a predetermined time and price. Indian mills and exporters have signed forward contracts to export around 1.2 Million tonnes of sugar before the new season for the crop year 2021-22 starting from October.
Mr. Prakash Naiknavare, Managing Director, National Federation of Co-operative Sugar Factories Ltd (NFCSF) says that before the start of the new season, the advance deals are happening. He further said that this will be first time India has entered into foward contracts for around 1.2 Million tonness and that too under the Open general Licencse(OGL), without any support of the government subsidy.
Due to supply issues faced by major global sugar exporters like Brazil and Thailand, Indian Sugar has been in great demand lately, the current season 2020 -21 ending this month, the exporters are seen touching a record 7.1 Million tonnes, surpassing the previous highs of 5.9 Million tonnes during 2019 -20.
He further added that if this trend continues the number of 1.2 Million tonnes will go up by the end of the 2021 – 2022 season, we could export around 5 – 6 Million tonnes of both raw and whites under OGL and it is also indicated by Indian Sugar Mills Association (ISMA) . The Brazilian sugar season is getting curtailed this month instead of November, which creates a great opportunity for India between the month of October and January, as sugar is not available in any other Global markets apart from India. He also appealed to all our members across the country to start the season with raw sugar and export so that their liquidity can improve, as they traditionally start with white sugar. Raw sugar production has many advantages compared to the whites, as the cost is less, & the steam saving is good and the recovery goes up, also it will help mills save on their interest cost.
He said that prices are good currently and in future but they are likely to be better than the present price due to Brazil and Thailand’s supply chain disruption. He urged exporters to produce raw sugar over white because raw sugar as preferred over white sugar because 75 % of the global tradeable surplus of around 50 Million tonnes is Raw sugar. It makes sense to go after the countries where Brazil and Thailand Sugar would have gone.