India agrees to export one million tonnes of sugar

India has decided to allow one million tonnes of white sugar exports, Trade Minister Anand Sharma said on Tuesday, double initial expectations from the world's second-biggest producer and sending global prices lower. "We have to balance the interest of farmers, consumers and the industry. There was a demand for three million tonnes but we allowed only one million tonnes, keeping in view the interest of all the stakeholders," Food Minister K. V. Thomas told reporters.
The world's biggest consumer of sugar is forecast to produce as much as four million tonnes more than it needs in the 12 months from October 1, but the government has been watching domestic prices as inflation spirals to double digits. "Right now it is premature to discuss the second tranche of exports. The season has just started and the government has already allowed permitted one million tonnes instead of half a million tonnes expected," said Prasoon Mathur, senior analyst, Religare Commodities, a New Delhi-based brokerage. New York raw sugar futures traded down 1.78 percent at 23.66 cents a lb at 1431 GMT while Liffe white sugar March futures fell 1.01 percent to $618.4 a tonne.
"Volumes are pretty low so it didn't take much to push it and since the news has come out there hasn't been a great deal of volume. It's just hit some sell stops in New York," said a London-based broker. India's decision to allow the exports under open general licence (OGL) comes as global markets are likely to see ample supplies, according to industry expert Jonathan Kingsman, who is expecting up to 8 million tonnes surplus in the next 12 months.
Domestic prices have risen recently on hopes for exports and a falling rupee, which touched a record low on Tuesday, has made overseas sales even more attractive. "This is a very positive development for the market. Tomorrow sugar futures will open significantly higher. Spot prices will also harden tracking futures," said Ashok Jain, president of the Bombay Sugar Merchants Association. The December sugar contract on India's National Commodity and Derivatives Exchange ended 0.2 percent higher at 2,946 rupees ($56.33) per 100 kg.