Indonesia May Open Door to Indian Sugar
Going by the projections, the country's sugar production is set to bounce back next year by about 15 per cent.
The country’s sugar production has reached 16.98 million tonne till February 15 of the current marketing year, which is 22.7 per cent lower than 21.96 million tonne output till the same period a year ago, taking a hit in the ongoing season mostly due to vagaries of weather. Besides, as many as 23 mills have stopped crushing operations, thanks to the non-availability of sugarcane. However, going by the projections, the country's sugar production is set to bounce back next year by about 15 per cent. It's true that the next monsoon season will decide the final size of India's next sugarcane crop, but sector analysts said that at present, India is likely to produce nearly 30 million tonnes of sugar in 2020-21 as against 26 million tonnes expected in 2019-20. Interestingly, India has a large carry forward stock from the surplus production of the previous year, although it is not normal for a country to carry stocks of eight to 10 million tonnes.
On one hand, there is this large carry forward stock and on the other, there is a global deficit of 8-9 million tonnes. Little wonder therefore that there is a higher demand for Indian sugar from the overseas markets. And the Indian Sugar Mills Association is possibly right when it says that India’s sugar export may cross 5 million tonnes in the marketing year ending September riding on these two factors. It is pertinent to mention here that the government of India has allowed export of 6 million tonnes of sugar for the current year, under the maximum admissible export quota (MAEQ) to help deal with the surplus sugar. During 2018-19, sugar marketing year, India had exported 3.8 million tonnes against the mandatory quota of 5 million tonnes. Mind you that nearly 1.6 million tonnes of sugar has already been exported from India, and nearly 3.2 million tonnes of contracts have been signed for exports. This is notwithstanding the fact that some sugar mills are not planning to export sugar against their allocated export quotas and a few of them have even surrendered a part of their MAEQ to the Centre. Significantly, the Centre, through a recent circular, warned mills, who were not able to utilise their export quotas and still did not surrender or relinquish them, that such mills would not be entitled to their claims for third and fourth quarters for the sugar buffer stock they are maintaining.
Amidst all these, Indian sugar mills are getting ready to cash in on the prospect of resuming exports to Indonesia. If things go right, India may sell 250,000 tons of raw sugar to Indonesia by the end of the local crushing period in May after a change in quality rules by the Southeast Asian country. Indonesia has now changed the color specification for raw sugar imports to allow shipments from India. Indonesia had earlier kept a minimum limit of 1,200 ICUMSA (International Commission for Uniform Methods of Sugar Analysis) for its imports, but Indian mills don’t produce raw sugar of such quality. Now, this level has been relaxed to 500-600 ICUMSA.
