Mar 18, 2016

Myanmar – surprise bulk buyer of Indian sugar

Even as sugar millers show reluctance to sell their produce overseas on the rising trend in domestic prices, the shipments of the Indian sweetener to Myanmar are seen touching a million tonnes.

Myanmar has emerged as the biggest buyer of the Indian sugar in the current 2015-16 season with shipments estimated at close to 9.5 lakh tonnes, so far, as against a mere 1,040 tonnes in the corresponding period last year, according to the Indian Sugar Mills Association (ISMA).
Chinese connection
Trade sources suspect that the final destination for the Indian white sugar finding its way into Yangon could be China, the largest buyer of the sweetener.

China had reportedly imported 5.5 million tonnes of sugar in 2014-15 topping the list of large sugar purchasing nations that include Indonesia and United States among others.
Export prospects
Officials at ISMA said that sugar exports in the current season, so far, have topped 11.5 lakh tonnes against 2 lakh tonnes in the corresponding period last year.

Bulk of the Indian exports were shipped to Myanmar, which has emerged as the largest buyer this year.

Indian millers have so far, contracted about 13.88 lakh tonnes of sugar for exports. “Besides Myanmar, the shipments are happening to the Middle East, Sri Lanka and Egypt among other countries,” said MG Joshi, Managing Director of the National Federation of Sugar Co-operatives, the apex body of sugar co-operatives in the country.
Govt subsidy
In a bid to help resolve the sugar sector crisis, the Centre had announced a subsidy of ₹45 per tonne to the cane growers and had linked it to the export performance of the sugar mills.

The government had stipulated that mills export at least 80 per cent of the surplus of 40 lakh tonnes for the current season to avail the subsidy.

However, with the sluggish trend in overseas shipments mainly on account of the millers’ reluctance to sell their produce overseas due to higher domestic prices, the total exports may not even touch 20 lakh tonnes, trade sources said.
Prices firm up
Sugar prices have firmed up in the domestic market even as the crushing has entered the last leg of the current season.

Ex-factory prices in the largest producing state of Maharashtra, which had touched a low of around ₹2,000 a quintal at the beginning of the current crushing season in November have firmed up to around ₹3,000 levels now.

“Despite the increase in prices, mills are yet to recover the production cost, which currently stands at ₹3,200 per quintal,” Joshi said.

The market sentiment remains bullish on concerns of a lower output, a trend reflected in the futures prices on the NCDEX.

Production till February end stood at 19.94 million tonnes, marginally higher than corresponding last year’s 19.58 million tonnes.

“A new market has opened up in Myanmar,” said Abhijit Ghorpade of Ghorpade Agrovet, a merchant exporter in Kolhapur.

“There is export demand at ₹2,650, but millers are not interested to sell at a discount,” he added.

Source: The Hindu Business Line