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Sugar Exporters Worried Over Thin Orders, Falling Prices 16 Dec 2011  
Sugar Exporters Worried Over Thin Orders, Falling Prices

Sugar Exporters Worried Over Thin Orders, Falling Prices

 

New Delhi: Lack of export orders from key buyers such as Pakistan, Bangladesh and Sri Lanka coupled with a decline in global prices are compounding the woes of Indian sugar factories.

This is even as cane crushing gains momentum and millers, faced with liquidity issues; struggle to sell sugar in the domestic market.

“Buyers have adopted a wait-and-watch policy as prices are on a downtrend on global surplus,” said Mr. Abinash Verma, Director-General of the Indian Sugar Mills Association (ISMA).

White sugar futures in London that traded at $710.5 a tonne for March 2012 contract in September are now hovering around $608, a decline of 15 per cent in last four months. Similarly, the May 2012 contracts that ruled at $698 in September are now hovering at $ 601.

The Government recently allowed exports of one million tonnes of sugar and notified it in early December. Since then, the Directorate of Sugar has issued export permits for only 22,587 tonnes, explaining the sluggish off-take for Indian sugar in the export market.

“This is not the best time to judge exports,” said Mr. Ram V. Tyagarajan, CMD, Thiru Arooran, Sugars, stating that the sluggish trend was not unusual during December. He expects the exports to pick up after January 10.

Corroborating Mr. Tyagarajan’s views, Mr. Sanjay Tapriya, Chief Financial Officer at Simbhaoli Sugars Ltd, said the exports will pick up going forward. Though millers are confident about off-take, the export premium has taken a hit as on account of global price crash.

The recent fall in rupee against the dollar also has not brought any cheers to the exporters. “The decline in global prices has been at a faster pace when compared to the rupee devaluation,”Mr. Taparia said.

The exporters are realising Rs 4-5 a kg more than the domestic realizations, depending on the quality of sugar and the destinations to which it is exported. “The mills are facing double whammy both from domestic and market,” Mr. Verma said. Needed cash flows, Mr. Verma said.

 

 

(Source: Daily Shipping Times Dt. 16.12.2011)

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