Centre likely to tread cautiously on the issue of open sugar exports

NEW DELHI: Abandoning earlier optimism, the Centre is likely to tread cautiously on the issue of open sugar exports . Indications from the food ministry now are that a decision, based on firmer sugarcane yield and recovery figures, is likely to be taken only between late December or the first half of January.

"A decision on exports and the quantum is likely to be taken only when the government is physically sure of sugarcane yields and resultant sugar output projections by January, although some indications are already available by December," an official told ET.

In end October, the Centre had indicated its keeness on to free sugar exports under OGL by the first week of December and dispense with the custom of issuing Ros (release orders) to mills for the same. A total of 2mt of sugar exports was being mentioned, albeit in a staggered and staged manner of smaller quantities. Interestingly, the indications had come immediately after food and consumer affairs minister Sharad Pawar upped, in end October, official estimates overnight to 25mt, in sync with industry estimates, from a much lower 23mt earlier.

The move to advantage the domestic sugar industry by freeing up exports was being considered against a backdrop of record sugar prices in the global market and a situation where, for the first time in 15 years, the Indian sugar industry found itself in a position of projected plenty even while the global market experienced marked supply tightness.

Current indications on exports being delayed is unlikely to go down very well with the industry, especially since the delay on a decision has already pushed global white sugar prices down to $720/tonne against almost $100/higher, i.e., $810/tonne in October, in tandem with tight supply. ""That advantage has now been frittered away on account of the delay in decision. Sugar price is much lower than breakeven rates at this juncture," an Indian Sugar Mills Association (ISMA) official maintained.

Government officials do not rule out the possibility of sugar exports under OGL being opened up in a staggered manner post mid January, in order that domestic prices are not affected steeply, should overall production estimates of 24.5-25mt+ be confirmed by early next year. "Had about five lakh tonnes of sugar been allowed for export by early November, industry could have been advantaged by high global prices. Exports could have subsequently been tightened, should there have been apprehensions over production in the top output states of Maharashtra and UP," the ISMA official held, however.

The decision to delay the decision on free sugar exports is believed to have come based on doubts over sugarcane yields in top cane producer state UP following late rains extending upto late October/November and insufficient difference between day and night temperatures. Sugarcane needs sunshine in the day for recovery of sucrose ot be high at this time but this is noticeably lower than average at present. In mid November, the Geneva based SGS SA for Bloomberg said that sugar production in India, the world’s second largest, may be 8.7% less than predicted as rain, pests and disease had reduced yields in UP. It pegged output at only 23.27mt in 2010-11. .. Industry, though, is still sticking to its projections of 24.5-25mt sugar production.

source: indiatimes