India seals deals to export 175,000 T raw sugar this year

Indian traders have struck deals to export about 175,000 tonnes of raw sugar for December-January delivery, three trade sources said on Thursday, marking their first sale of the sweetener in the new season beginning October.

Traders have signed contracts to supply about 50,000 tonnes of raw sugar to Iran, while the rest of it will go to refineries in the Middle East, said a source with direct knowledge of the deal.

Confirming the deals, another source said dealers had agreed to export raws from India for $445-$450 a tonne, free on board.

So far India has not struck deals with Indonesia, the world's biggest raw sugar importer, as Jakarta has already locked in supplies until June 2014, an Indonesian trader said.

India, the world's biggest producer after Brazil, is expected to step up raw sugar exports in the 2013/14 season.

"As crushing gathers momentum in the new season, we expect more export deals for raw sugar and that is absolutely essential for mills to survive," said the third source, who also confirmed these contracts.

In the 2013/14 season, India is likely to export about 2 million tonnes of sugar, including 1.2 million-1.5 million tonnes of raws, traders said. India could export hardly 300,000 tonnes of sugar, all whites, in the previous 2012/13 season.

Higher output in the past three years and weak demand for white sugar exports have left mills with massive stocks of the refined variety.

Carry-forward stocks on Oct. 1, when the current 2013/14 sugar season began, were at 8.8 million tonnes of whites and the country is forecast to produce 25 million tonnes of sugar this year, higher than local consumption of 23 million tonnes.

Mills incur extra costs when maintaining large stocks and domestic prices tend to remain soft because of big inventories.

To overcome the problem, mills in India, also the world's biggest sugar consumer, are increasingly turning towards raw sugar exports this year that began in October.

To cash in on the demand for raws, traders are also encouraging mills to produce more raws at the start of season.

Expanding sugar refining capacities in Asia and Africa will absorb supplies of raws from India.

Capacity for turning raw sugar into the white variety in countries such as Sri Lanka, Iraq, Yemen, Egypt and Bahrain, is expected to almost double from current levels of 5.6 million tonnes annually in coming years.

On Thursday, the Indian Sugar Mills Association, a producers' body, asked the government to give incentives to help boost exports of the refined variety.

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