India set to export sugar; Prices to fall on the International stage

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India set to export sugar
Sugar mills in India, the second-biggest producer in the world have received government approval yesterday to export 500,000 metric tons of sugar. This will increase global supplies and effect in lower prices.

Abinash Verma, Director General of the Indian Sugar Mills Association was reported by bloomberg as stating, "Indian Mills may have may have as much as 1 million tons of sugar for exports from the crop season ending September 30."

The increase in sugar export from India will effect the decline in sugar prices. The fall in price will bring down the global food costs that United Nations estimates. This estimate climbed high to record levels in February.

Experts consider that there will be an excess supply of 10.3 millions tons next season. This will reverse the shortage of 500,000 tons this year.

As of now, India has permitted sugar mills to ship 2.2 million tons of sugar. Since, the crop season began on October 1, it is expected that the output in 2011- 2012 season will increase by approx 9.5% to 26.5 million tons. According to the sugar mills association, earlier estimates suggested that the season will produce 24.2 million tons of sugar for the season.

Verma further added that the association of sugar mills would like to export more sugar before the season ends. This rational for such aspirations is the carryover stocks. The expectation is that in this year the carryover will be around 5.7 million to 6 million ton, which will be higher than the 5 million ton that was available last year.

According to the group, inventory with mills totalled 14 million tons at the end of last month.

As per the Agriculture ministry, Indian farmers have planted sugar cane in 5.09 million hectares (12.6 million acres) as of June 17, 223,000 hectares more than a year earlier.

Investor angle: This will help the sugar stocks book gains on their reserves. It will also give a good opportunity to open for retail investors to book profit. 

OneIndia Money

Read more about: sugar, industry, export, capital market
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