EXCLUSIVE India to restrict sugar exports, 8m ton limit, one option: sources

  • India could limit sugar exports to 8m tonnes by 2021/22
  • Steel mills have so far signed contracts to export 7 million T
  • The Government wants to guarantee an ample supply during the festive season
  • Shares of sugar companies fall

MUMBAI, March 25 (Reuters) – India plans to restrict sugar exports for the first time in six years to prevent a rise in domestic prices and may limit this season’s exports to 8 million tonnes, government sources and officials told Reuters. of the industry.

An announcement could come early next month, they said.

Shares of sugar manufacturers fell on the news, with Dhampur Sugar Mills (DAMS.NS) and Balrampur Chini (BACH.NS) each falling 5% and Dwarikesh Sugar (ABOUT US) losing 6%.

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“Sugar production is going to be record high, but stocks are running out fast due to exports. Uncontrolled exports could create shortages and local prices could rise during the festive season,” said a senior government official with knowledge of the matter. who asked not to be informed. identified.

Two of the three sources said the government has planned a limit of 8 million, while one official said the government is also exploring the option of an export tax to discourage sales abroad.

India’s Ministry of Trade and Industry did not immediately respond to a request for comment.

An 8m t cap for the marketing year until the end of September could lead to a de facto export ban from May, as traders say mills have already signed contracts to export 7m t until the moment.

Based on March deals for around 1m tonnes of exports, they estimate mills could sign contracts for another 1m tonnes in April after global white sugar prices rose to a 5-year high on Thursday.

Lower output in top producer Brazil and firm oil prices encouraging mills to produce more sugarcane-based ethanol have spurred global price gains. Export restrictions by India, the world’s second-largest sugar exporter, would likely drive prices up further.

Previous projections estimated that domestic sugar stocks as of October 1 could fall to a five-year low of 6.8 million tonnes due to record exports, but those forecasts now look optimistic after rising global prices. of sugar.

“New Delhi is eager to start the new season with an opening stock of 6-7m tonnes, which is enough to meet December quarter demand,” an industry official said.

Demand typically increases during the December quarter due to weddings and festivals like Diwali and Dussehra.

Any restrictions on sugar exports would be the first since India imposed a 20% tax in 2016 and would represent a sea change for a government that until last year was subsidizing mills struggling to make cane payments to farmers. due to record bookings.

But bountiful exports of more than 14 million tonnes over two years now mean New Delhi’s priorities have shifted to producing enough sugar to meet local demand.

“Government policy is clear. Produce enough sugar to meet local demand and make as much ethanol as possible from the remaining surplus sugarcane. Don’t rely on exports as global prices are volatile,” said one policy maker who declined to be identified.

The government is also naturally concerned about food inflation as prices of basic goods such as edible oils and grains are rising in the wake of the Russian invasion of Ukraine, a Mumbai-based distributor of a global trading company.

In the past, the government was embarrassed to import sugar at higher prices after exporting record amounts, the distributor said, but added that he did not think the government would be reticent about imports now if it really needed it.

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Information from Rajendra Jadhav; Edited by Sanjeev Miglani, Lincoln Feast, and Edwina Gibbs

Our standards: The Thomson Reuters Trust Principles.

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