UPDATE 1-Indian mills kick off sugar exports, sales to slump

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NEW DELHI, Nov 12 (Reuters) - Indian mills have exported 25,000 tonnes of sugar since the start of October, when the new sugarcane crushing year began, a trade source said on Wednesday, adding overseas sales this year would slump on lower output.

Sugar firms have sold the sweetener to Somalia and Yemen at $370-$380 per tonne free on board, the official with a leading commodities brokerage, who could not be named, told Reuters.

"These are open exports and not part of the advanced licence scheme," he said. "Though the deals have been struck in the new sugar year beginning October, mills have sold from their old stocks."

Under the advance licence scheme, the Indian government allowed mills to import duty-free raw sugar in 2005 with the condition they export an equal quantity of white sugar within three years.

The official said India would not be a major player in international markets in the year to September 2009, unlike the year before when the world's biggest producer after Brazil exported a record five million tonnes.

In an interview on Tuesday, Shanti Lal Jain, the head of the Indian Sugar Mills Association, said forecasts of a sharp fall in output to less than 20 million tonnes and lower global prices would cut India's exports to 400,000-500,000 tonnes in 2008/09.

Jain, who heads the apex body of private sugar producers, said consumption in the world's biggest user would be 23 million tonnes, leaving little for exports despite supplies carried over from the previous season.

Trade officials say India's carryover sugar stocks on Oct. 1 were at nine million tonnes, while the government says stocks from the last season stood at 11 million tonnes.

"There is a talk in the market that carryover stocks could be as low as 6 or 6.5 million tonnes. The government may also relent and revise its carryover stock figures," the trader said.

(Reporting by Mayank Bhardwaj)