He said millers are hopeful that the market sentiment will improve and logistic constraints will ease by January before initiating new deals.Indian sugar mills are slow on export deals following the fall in global sugar prices. In addition, logistics constraints have delayed shipments. Sugar mills have signed contracts to export 3.5 million tonnes in the 2021-22 sugar season, trade sources revealed.
However, Rahil Shaikh, managing director, MEIR Commodities India, said that the prices fell sharply after the Omicron variant spread, affecting the market sentiment. “Logistics position is very tight as average logistics cost increases by 20-25%, especially truck freight. A few railway rakes are available with more than 300 indents from sugar mills on the waiting list at Kandla port.
He said that along with the signing of the deals, the dispatch of sugar would also have to be done on time. Global sugar prices range between 19 cents a pound for raw sugar and $496 a pound for white sugar. Most of the export deals are done by mills in Maharashtra, which are facing huge logistics problems. As such, there are serious transportation problems both by railways and by road, Sheikh said. He said millers are hopeful that the market sentiment will improve and logistic constraints will ease by January before initiating new deals.
According to the Indian Sugar Mills Association (ISMA), most export contracts occurred when global sugar prices were in the range of 20 to 21 cents per pound of raw sugar, and mills find the current prices of around 18.6 cents unattractive. Trade body All India Sugar Traders Association (AISTA) also echoed similar sentiments. Sugar mills have exported 9.39 lakh tonnes of sugar till the first week of December during the 2021-22 marketing year beginning October 1 and are in no hurry to sell the stock in view of the sluggish global price trend, the trade body said. said .
About 4.68 lakh tonnes of sugar is in transit. AISTA said mills have so far contracted to export 33 lakh tonnes of sugar without government subsidy in the 2021-22 marketing year. This year sugar is being exported without government subsidy. The country exported a record 72.3 lakh tonnes of sweetener during the marketing year 2020-21.
Maximum shipments were made with the help of government subsidies. National Federation of Cooperative Sugar Factories (NFCSF) managing director Prakash Naiknavare said the sentiment has improved after the initial omicron scare. The scarcity of sugar in the international markets also works to the advantage of India and there is no restriction on the export of the commodity. He added that it is only a matter of time before the market sentiments improve and things get back to normal.