Sugar trades slow down due to rising prices
Domestic sugar prices in India increase by 13% in 2 months to a 4-year high.
India sugar exporters have paused signing new export deals. As per one industry official, a rally in local sugar prices to a 4-year high broadened the gap between domestic and global sugar prices. Sugar traders also predicted that global sugar prices will pick up further after bad weather damaged the harvests of the top sugar-producing country, Brazil. Abinash Verma, director-general of the Indian Sugar Mills Association stated that raw sugar in New York would need to increase to 20.5 cents a pound to again attract sugar exporters from the western Maharashtra state and the southern region. He also added that Indian sugar traders have already signed sugar export deals to ship 1.2 Mn MTS from the M.Y ‘21/’22 that starts from October 1, 2021, taking advantage of a recent rally in sugar prices.
Verma also said that Indian sugar traders are anticipating that global sugar prices will increase further. Sugar exporters are ready and waiting for an appropriate moment to sign more contracts. Global sugar prices may also get support from higher crude oil prices as sugar millers in Brazil may be encouraged to divert more sugar cane to produce ethanol.
Sugar Milling in northern India, including top grower Uttar Pradesh, will be willing to export if global sugar prices increase to 21.5 cents. India is estimated to export about 7 Mn MTS of sugar this season. Cargos will pick up from late October 2021, when crushing for the new season begins, as there will be pressure on millers to offer. The government may intervene and ask millers to sell more in the domestic market if sugar prices at factory gates continue to increase. The government monitors the trade of sugar in the local market.
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