SAO PAULO: India, the world's second-biggest producer of sugar and a swing exporter that can impact global prices, will export 2.59 million tonnes of its excess sugar production in 2013/14, an official said on Tuesday.
Traders in the past days struck deals to export about 175,000 tonnes of raw sugar for December-January delivery, marking their first sale of the sweetener in the new season beginning in October, which took some of the wind out of the recent rally in sugar prices.
ICE March raw sugar prices rose 0.26 percent to 19.47 cents per lb on Tuesday.
Although some market projections are expecting potential exports from the world's largest consumer of sugar at as much as 3 million to 4 million tonnes this season, Vijay Singhal, sugar commissioner for India's main sugar producing state of Maharashtra, said that would be unlikely.
"The international price of sugar is too low for exports. It would take government incentives or subsidies at these prices for sugar," Singhal said on the sidelines of the 13th Datagro International Sugar and Ethanol Conference in Sao Paulo.
The area of sugar cane is due to fall slightly in India's main sugar producing states to 5.12 million hectares in 2013/14 from last season's 5.17 million hectares due to unfavorable rains, Singhal said. Sugar production would only fall slightly to 24.3 million tonnes from 25.8 million the year before, he said.
"We have an internal sugar surplus of 8.8 million tonnes and we expect to export a net 1 million tonnes of refined sugar and 1.5 million tonnes of raw sugar," Singhal said.
Singhal added that the surplus will fall to 7.9 million tonnes next year in line with a declining output of sugar and growing consumption. Consumption of sugar that was growing at 3 percent to 4 percent in the country was helping bring down the surplus. He projected consumption at 23.9 million tonnes.
Datagro's conference kicks off the annual Sugar Week and Sugar Dinner on Wednesday that brings traders, buyers, producers and analysts from around the world.
"Two factors will determine the final export numbers: the monsoons and the government," said Singhal, referring to the general elections next year, which means that the government typically maintains or extends favorable minimum prices for cane producers.
Analysts say government subsidies for cane producers were likely to stay favorable for production next year at the cost of mills which were increasingly at the risk of going bust because of the high costs of cane and low price of sugar.
Guilherme Nastari, the Indian sugar specialist at analysts Datagro, said India should produce 24.4 million tonnes of sugar in 2013/14, down slightly from the 24.8 million last season. Meanwhile, Nastari saw India's consumption up slightly at 23.3 million tonnes in India from 23.1 million last year.
Datagro also projected production growth in the world's No. 2 sugar exporter after Brazil, Thailand, to 11 million tonnes in 2013/14, up from 10.3 million tonnes last season due to favorable price subsidies from the government there.
Thailand is expected to export more than 8 million tonnes of sugar this season, a first for the big Asian exporter, according to Peter Baron, Executive Director of the International Sugar Organization.