MUMBAI (Reuters) - Sugar exports from India have gained momentum due to strong demand from Indonesia and Iran as the rupee slid to a record low, increasing exporters’ margins from overseas sales, five industry officials told Reuters.
Higher exports from India, the world’s biggest producer of sugar, could put pressure on global prices and limit shipments from rivals such as Brazil and Thailand.
“In the last few days, Iran and Indonesia were buying for May and June shipments,” Rahil Shaikh, managing director of trading company MEIR Commodities India, told Reuters.
Indian sugar mills have already dispatched 3.7 million tonnes out of around 4.1 million tonnes of contracts signed for exports in the 2019/20 marketing year ending on Sept. 30, Shaikh and two other dealers with global trading companies, said.
Traders have shipped 719,922 tonnes to Iran so far in the season, while Indonesia bought a record 324,112 tonnes, according to data released by All India Sugar Trade Association (AISTA) on Thursday.
Indonesia has increased imports of Indian sugar after New Delhi boosted purchases of Indonesian palm oil amid a spat with rival supplier Malaysia, dealers said.
Indonesia and Malaysia account for 85% of the world’s palm oil output while India is the biggest buyer of the edible oil.
India effectively halted imports of refined palm oil from Malaysia in early January which sources have said was in retaliation for Malaysia’s criticisms over a citizenship law.
Large scale Indian exports to Indonesia were made possible after Jakarta changed purity regulations for sugar imports, said Shaikh.
Malaysia has also stepped up purchases since February and has so far bought a record 327,292 tonnes of sugar, according to data compiled by AISTA.
Indonesian buying has now slowed but Iran is still making purchases, said a Mumbai-based dealer with global trading firm, who is not authorised to speak to the media.
India’s total sugar exports in the current marketing year could rise above 5 million tonnes, up from earlier trade estimates of 4.5 million tonnes, the dealer said.
Some industry officials, including Praful Vithalani, president of AISTA, expect mills will able to achieve 6 million tonnes target set by New Delhi for the current marketing year.
The depreciation in rupee to a record low has been offsetting drop in global prices and making exports lucrative, Vithalani said.
India had set an export target of 5 million tonnes for 2018/19, but mills managed to export only 3.8 million tonnes despite incentives provided by New Delhi.
Reporting by Rajendra Jadhav; Editing by Jan Harvey and Jne Merriman