Coronavirus Impact: Slide In Global Sugar Prices Hits Exports From Mills
The subsidy-backed scheme of the central government had played a role in ensuring that mills took to exports to reduce the unsold inventory in the country. (File)
Logistics problems and a sudden slide in international prices due to the ongoing spread of the coronavirus (COVID-19) has put the brakes on sugar exports from India.
Millers feel the present situation might dash India’s hopes of exporting 50 lakh tonne (lt) of its MAEQ target of 60 lt. International sugar prices had firmed in view of a global shortage. India had emerged as an export hub due to the large stocks in the country. The subsidy-backed scheme of the central government had played a role in ensuring that mills took to exports to reduce the unsold inventory in the country.
The Indian Sugar Mills Association has stated that by the end of February, 35 lt of export contracts have been signed, of which 22-23 lt have already been shipped out.
Since the COVID 19 infections spread, international prices of raw and processed sugar have seen a sharp correction. Raw sugar, which was trading over the 15 cents per pound mark, has since corrected itself to the 12.50 cents per pound mark. Similarly, white processed sugar, which was commanding prices above $400 per tonne, has since come down by $30-40 per tonne in the last few days. The present prices, millers say, are not conducive to them.
Bhairavnath B Thombare, president of the West Indian Sugar Mills Association — the apex body for private millers in the state — said the present scare has also resulted in slow lifting of exports. Sugar is normally transported in ships, and at present, such vessels are short in supply. “There are cases where exporters have failed to lift their consignment despite paying for the same,” he said.
Mukesh Kuvadiya, honorary secretary of the Bombay Sugar Traders Association, said the present slump in crude oil prices can change the equations of the sugar industry for the current season. Low crude prices, he said, would result in Brazilian mills slashing their ethanol production and diverting said cane for sugar production. “If that happens, then international prices will certainly be hit for the season,” he said.
Also, as compared to the previous estimate of 240-250 lt production, he said India is expected to produce 280 lt of sugar for the current season. “Thus, sugar availability will increase and prices will remain low in the domestic market as well,” he said.
