MUMBAI (Reuters) - India’s sugar exports are likely to jump by nearly a third from a year ago to more than 5 million tonnes in 2019/20 as a rally in global sugar prices makes exports attractive, a leading trade body said on Tuesday.
Higher exports by the world’s biggest sugar producer could help compensate for a drop in shipments from Thailand, the world’s second biggest exporter, and could cap prices.
“Indian sugar exports may get accelerated in the coming months, and could achieve more than 5 million tonnes,” the Indian Sugar Mills Association (ISMA) said in a statement.
Global sugar prices hit a 2-1/2 year high earlier this month as deficit forecasts for 2019/20 were revised higher on falling production in Thailand and India.
Indian mills have contracted to export 3.2 million tonnes of sugar so far in the 2019/20 season that started on Oct 1 and nearly 1.6 million tonnes have already been shipped, the trade body said.
Years of bumper cane harvests and record sugar production have hammered Indian sugar prices, making it hard for mills to pay money owed to farmers, who form an influential voting bloc.
To reduce that debt and pare rising inventories, New Delhi has approved a subsidy of 10,448 rupees ($146.16) a tonne for exports in the 2019/20 season.
Despite higher prices and the government subsidy, a few mills failed to export sugar and have surrendered their quota, said the ISMA.
This surrendered quota is likely to be redistributed to other mills and the policy “would be announced shortly”, the trade body said.
In the last marketing year, Indian mills managed to export 3.8 million tonnes against an export target of 5 million tonnes set by New Delhi.
India has produced 17 million tonnes of sugar from Oct 1 to Feb 15, down nearly 23% from a year ago due to lower production in the second biggest producing Maharashtra state, the ISMA said.
The country’s sugar output in 2019/20 could fall 21.6% to 26 million tonnes, the lowest level in three years, the ISMA said.
Reporting by Rajendra Jadhav; Editing by Raju Gopalakrishnan