Tag Archives: sugar export

Sugar prices fall as India allows OGL exports

Contrary to some expectations India has allowed 500,000 tonnes of sugar exports under its Open General licence (OGL).  Despite forthcoming local elections and some concerns over agflation India has permitted the full 500,000 tonnes for export. Previously 200,000 tonnes had been expected following comments in recent days.

It is expected that over 1 million tonnes of sugar for export will be approved under OGL during the year once India has confirmation of the size of its crop.  India is the world's second largest grower.

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India procrastinates at the expense of exporters

India is still to announce whether the decision to permit 500,000 tonnes of sugar for export is to be ratified.  Sugar prices have fallen sharply recently and India’s indecision may cost exporters if after delays the panel of ministers approves sugar exports under its Open General Licence (OGL).

India is the world’s second largest producer of sugar after Brazil. The delay in confirming OGL exports had been to ensure sufficient domestic supplies and to avoid the impacts of agflation.

India is expected to produce between 24.5 million tonnes and 25.5 million tonnes of sugar.  Indian consumption is in the region of 22 million tonnes. Indian whites were available at $720 per tonne down by approximately $50.

Australian raw sugar exports to recover in 2012

Australian raw sugar exports are likely to be closer to 2 million tonnes in the 2011/12 season rather than the usual 3 million tonnes.  Exports are unlikely to recover and revert to the 3 million level until the 2012/13 season.  Cyclone Yasi hit Queensland and damaged its sugar cane crop in early February.  Queensland produces 90% of Australia’s sugar.

EU permits imports and out of quota sugar

The EU faces tight sugar supply with European buyers, including confectioners, finding difficulty buying quota sugar.  EU regulation for the sugar industry was revised in 2006 following a WTO decision that EU production quotas for each country should be reduced to the extent that the block becomes an importer of a minor part of its consumption with developing countries being granted preferential access as exporters to the EU, facing no import tariffs, and from 2015 without restrictions on the quantities exported. 

EU quotas for its sugar production first decreased in 2006 in the expectation that developing countries would export the deficit.  Such exports have not always materialised and more recently high world sugar prices have resulted in such sugar being exported elsewhere.  The EU, facing shortages, has decided to allow out of quota sugar and additional imports.

India discuses sugar but defers decision on OGL

The indian government discussed sugar prices and domestic sugar stocks today.  The panel chaired by Finance Minister Pranab Mukherjee discused the topic which was scheduled on the agenda for today’s meeting but did not reach a decision due to the absence of Sharad Pawar the Minister for Agriculture, Anand Sharma the Commerce Minister and K.V. Thomas the Food Minister.

Indian exports have not been banned but sugar shipments have had restrictions placed discouraging exports to protect domestic sugar supply in the wake of rising agflation.  Sugar currently sells at Rs 32-35 per kg retail. Prices have been relatively stable for past few months due to higher production.

Sugar production is expected to be 24.5 million tonnes during the 2010/11 season which started in October and runs through to July.  Production is up from 19 million tonnes last year. Domestic consumption is approximately 22 million tonnes.

The Sugar Mills Association has suggested that one million tonnes of sugar should be permitted for export under OGL due to this being surplus to India’s domestic consumption. 

A further meeting of the panel is expected in the next few weeks.  The sugar market awaits the decision in an indication that supply will ease.

Sugar lineup increases in Brazil

The existing lineup of ships in Brazilian ports stands at 18  up from 16. The ships are listed to ship 500,002 tonnes of sugar from Brazil up from 470,000 last week as the 2010/11 comes to an end.  The line up at Santos is currently the largest with 245,000 tonnes scheduled to leave the port.

India may hold the key to world supply

With Brazil unlikely to ease sugar market supply concerns in the short term and its rising demand for ethanol India’s sugar exports under Open general Licence (OGL) may hold the key to market supply and consequently an easing in sugar prices which currently stand at near 30 year highs.

With up to 25% of Australia’s sugar crop lost to cyclone Yasi and tight global supply, India may be pivotal to the market establishing whether the decision recently announced by India approving 500,000 tonnes of sugar exports under its sugar OGL is to be ratified.  The decision has been referred by a government keen to ensure that sufficient supply exists for domestic consumption before permitting such exports to proceed.  A review of the decision and its possible ratification are yet to take place.