MUMBAI: Traders have signed deals to export 75,000 tonnes of white sugar in July, reversing an import trend after the rupee's depreciation and with strong demand in Gulfand African states due to the Islamic fasting month of Ramadan.
The deals were signed between $500 to $510 per tonne free on board ( FOB) basis with most set to be exported from Jawaharlal Nehru Port Trust in Mumbai, four dealers told Reuters.
"Due to Ramadan there was demand for white sugar from Sri Lanka, Gulf and African countries, but they needed prompt shipments," said Kamal Jain, managing director of sugar brokerage Kamal Jain Trading Services.
The holy month of Ramadan starting July 9, when Muslims fast from dawn to sunset, routinely sees a rise in demand for sugar.
India, the world's biggest consumer of sugar, became an importer of the sweetener in 2012-13 after exporting sugar for two straight years. Changing weather conditions can make India an exporter one year and importer the next.
But raw sugar imports have dropped dramatically as a fall in the rupee to a record low squeezed margins for refiners amid a drop in local prices.
"Exports were not viable, but depreciation in rupee gave traders an opportunity (to export)," said Jain.
Sugar mills sold the sweetener to merchant exporters at around 28,000 ($470) to Rs 28,500 per tonne at factory gate, said an official with a Maharashtra based co-operative sugar factory that sold sugar to a Mumbai-based merchant exporter.
"Domestic demand is weak and mills needed money to make cane payments to farmers. So mills reduced ex-factory prices to exporters," the official said.
Indian sugar futures were trading near their lowest level in a month on weak demand from bulk buyers like ice-cream and cold drink makers due to an early arrival of monsoon rains.
"No one is importing right now. There is no parity. There is also uncertainty over import duty. If government doubles duty, then suddenly refiners calculations will go wrong," said another dealer based in Mumbai.
India's farm minister has sought to increase the import tax on sugar, although the proposal was opposed by the country's food minister.
India is likely to produce 24.6 million tonnes of sugar in 2012/13, an industry body has said, against an annual demand of about 23 million tonnes.