India is expected to ship out a record 70 lakh tons of sugar for the current 2020-21 sugar season, which ends in September, after overcoming Covid-related supply chain issues. This is an increase of 17.64 percent over the previous season's 59.50 lt. Indian sugar exports have reached new highs for the second year in a row.
According to Abinash Verma, Director General of the Indian Sugar Mills Association (ISMA), “shipments for the sugar year 2020-21 could exceed 70 lt. In the first eleven months of this season (October-August), around 66.70 lt. has been physically shipped out, compared to 55.78 lt. in the same period last year”.
Furthermore, as of September 6, another 2.29 lakh tons of sugar were at the ports, either loaded onto vessels or stored in godowns awaiting the arrival of more vessels. Considering that the current season still has 20 days left, total exports for the current season could exceed 70 lt., according to ISMA.
Aside from abundant output and strong demand, the Indian exporters' and sugar mills' efficiency in moving cargo during the Covid period, overcoming hurdles such as truck shortages, labor shortages, and port congestion, has enabled the record shipments.
Unfazed by difficulties
Furthermore, Verma stated that there was talk in global trade circles a few years ago that India’s sugar exports could not reach 5 million tons due to logistical issues. “We've proven the rest of the world that they're wrong. Both sugar mills and exporters have put in a lot of effort,” he noted.
Sugar production in India is expected to reach 310 lakh tons in the 2020-21 season.
Raw sugar accounted for 34.28 lt. of the total expected exports, followed by 25.66 lt. of whites and 1.88 tons of refined sugar. Mills are also reported to have provided 7.17 lt. of raw sugar to port-based refineries for refining and export. So far, 4.49 lt. of shipments have been done under the MAEQ of the 2019-20 sugar season, which has been extended until December 31, 2020.
Key Markets of Sugar in India
Indian sugar is mostly shipped to Indonesia, Afghanistan, Sri Lanka, Somalia, the United Arab Emirates, China, Saudi Arabia, and Sudan, among other countries. Indonesia was the most popular destination, accounting for 29% of total exports, followed by Afghanistan, which accounted for 13% of total exports.
Regarding the prognosis for the coming season, Verma believes that India would be able to export approximately 60 lakh tons.
Brazil Sugar Production
Sugar prices are currently at a four-year high of roughly 20 cents per pound in the international market. Despite indications of decreasing sugar production in Brazil during the current sugar season (April 2021 – March 2022) as a result of dry weather conditions caused by drought and frost, world prices are projected to stay positive. Brazil's upcoming sugar season may also be impacted by the country's worst drought in 90 years, according to reports.
As a result, many international organizations, including the International Sugar Organization, have forecast a higher sugar deficit of 4-5 million tons in the following sugar season (2021-2022), which begins on October 1, 2021.
Furthermore, sugar production in Thailand is expected to grow next season compared to prior years, but will still be almost 3-3.5 million tons lower than its normal production of 14-14.5 million tons. Thailand sugar would not be available until January 2022. This means that Indian sugar mills will have a strong opportunity to export excess sugar in the next months, up until January 2022, and then until April 2022, when Brazilian sugar enters the market.
Many sugar mills, according to Verma, have signed forward contracts for shipment in the coming season. “It is therefore believed and expected that Indian sugar mills will use this opportunity and will be able to export to the tune of 60 lakh tonnes during the next season,” he said.
