Indian sugar mills clinch Sri Lanka export deals

Indian sugar mills are aggressively signing export contracts after New Delhi approved a subsidy for overseas sales and as global prices hit their highest level in 3-1/2 years, four industry officials told Reuters.

Mills have so far agreed contracts to export 1.5 million tons of sugar in the 2020/21 marketing year that started on Oct. 1, mainly to Indonesia, Sri Lanka, Afghanistan and African countries for shipments in January to March, the officials said.

Contracts were signed between $375 and $395 a tonne on a free-on-board (FOB) basis, three dealers directly involved in the deals said. They did not wish to be identified in line with their organizations’ policies.

The exports will help India to bring down stockpiles and support local prices, which, at odds with the global market, have been falling due to oversupply at home.

But the shipments could cap a rally in benchmark prices in New York and London.

“Most of the contracts were done for raw sugar, which is heading to Indonesia,” said Rahil Shaikh, managing director of MEIR Commodities India, in the Reuters report.

Indonesia, which traditionally imports the bulk of its requirement from Thailand, started buying Indian sugar in 2020 after changing purity regulations for sugar imports.

Out of the 1.5 million tons of export contracts signed, nearly 1 million tonnes was for raw sugar, while the rest was for white sugar, dealers said.

Sri Lanka, Afghanistan and African countries are buying small amounts of white sugar, but demand is limited for whites due to a shortage of containers, they said.