India May Export More Sugar Than Forecast on Higher Yields

(Bloomberg) -- India may export more sugar than previously forecast as higher yields boost supply in the world's top consumer.

Shipments may total 1.5 million metric tons in the next six to eight months, said Abinash Verma, director general of the Indian Sugar Mills Association. Last month, he said millers were asking the government to abolish a 20 percent export duty so they could attempt to ship about 1 million tons in the year started Oct. 1. India exported 1.66 million tons of sugar in 2015-16 and about 46,000 tons in 2016-17, according to the association.

Global sugar prices have tumbled about 33 percent in the past year on a global surplus as production increases in Europe and India. ISMA last month raised its 2017-18 sugar output estimate 4 percent to 26.1 million tons, the highest in three years. Green Pool Commodity Specialists this week forecast Indian production at 28.1 million tons, with expectations of an equal or better crop next season.

“Looking at the current trend of production till Feb. 15 and the reported high yields in Maharashtra and Karnataka, the sugar production estimate will be reviewed and may have to be revised,” Verma said in an interview in New Delhi on Thursday. “The increase in yields is a big surprise.”

Share prices of Indian sugar producers closed higher on Friday. Dhampur Sugar Mills Ltd. gained 4.1 percent, Balrampur Chini Mills Ltd. advanced 1.7 percent and Shree Renuka Sugars Ltd. rose 1.6 percent. In New York, raw sugar futures for May delivery dropped 0.9 percent to 13.46 cents per pound.

India imposes a duty of 20 percent on sugar exports, which millers are seeking to have abolished. Without the duty, an exporter may lose 10 rupees (15 cents) to 12 rupees a kilogram at current global prices, Verma said. Shippers could seek to export at a loss while also selling into the domestic market, where prices are elevated, he said. More than 90 percent of sugar output will be sold locally, he said.

“It is logical to export at a loss and recover that from domestic sales at increased prices,” Verma said. “We have requested the government to allot export quotas for individual mills. Production next year is going to be higher than this year on improved planting.”

Surplus sugar available for export may total 3 million to 4 million tons in the year starting Oct. 1, Verma estimated.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net.

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Atul Prakash

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