India turns ‘preferred’ source for white sugar supply as global market turns volatile
09 March 2022, New Delhi: India is becoming a “preferred” source for sugar supplies, particularly white sugar trade in spot, as various factors — from a volatile crude oil price movement to prospects of higher freight rates — are forcing buyers to look for safe, reliable and competitive sellers.
“In the last three years, we have established as one of the reliable exporters of sugar in the global market. This has helped various countries, especially in the Gulf, to look at Indian sugar,” said Praful Vithalani, President, All India Sugar Traders Association (AISTA).
There is a renewed demand for Indian sugar, says Rahil Shaikh, Managing Director, MEIR Commodities India Pvt Ltd. “Ramzan demand has added another dimension to Indian sugar exports,” he said.
“We have witnessed a demand of over five lakh tonnes (lt) in the past week, particularly after the Russian-Ukraine conflict worsened,” said Vidya Sagar, VR Director, Bulk Logix.
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“There is a deficit of sugar in the global market. Buyers look at Brazil and India to meet their needs. With crude oil prices rising over $90 a barrel, Brazilian sugarcane is being diverted to ethanol improving opportunities for Indian sugar export,” said Abinash Varma, Director-General, Indian Sugar Mills Association (ISMA).
Last week, ISMA raised the estimates of sugar exports from 60 lt to 75 lt.
On Monday, benchmark raw sugar futures on Intercontinental Exchange was quoted near a three-month high of 19.35 US cents a pound ($430 a tonne), up over 7.5 per cent in the past week. White sugar was quoted at $532.30 (₹40,975) a tonne in London.
Raw sugar output
“Raw sugar will be available until, say, April-end or the utmost the middle of May. After that, we will have only white sugar,” said MEIR Commodities’ Shaikh.
“Of late, there have been sharp movements in the sugar futures. Within two days, prices rise or drop by 8-10 per cent. This makes it difficult to trade in raw sugar and contracts are entered in advance,” said AISTA’s Vithalani.
Some traders in the Gulf bring sugar into the region and hold the inventory for at least two months. With such sort of volatility in the market, they see India as a better option since Indian cargoes can reach Gulf within a short span of time between one week to 10 days.
“This is making Indian sugar a preferred choice with the added dimension of lower freight costs compared with countries such as Brazil,” said Vithalani.