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    Sugar millers eye ‘golden opportunity’ in Indonesia

    Synopsis

    India, which vies with Brazil as the top producer, may sell 250,000 tons of raw sugar to Indonesia.

    Sugar-Getty-1200Getty Images
    Increasing exports from India may curb the rise in global prices.
    By Pratik Parija and Yoga Rusmana

    Indian sugar millers, saddled with record stockpiles, are eager to cash in on the prospect of resuming exports to Indonesia after being absent from the world’s top import market for years.

    The nation, which vies with Brazil as the top producer, may sell 250,000 tons of raw sugar to Indonesia by the end of the local crushing period in May after a change in quality rules by the Southeast Asian country, according to the median of six estimates in a Bloomberg survey of traders and officials.

    India is returning to Indonesia after a severe drought cut production in Thailand, normally the main supplier of raw sugar to the country. The new export market may help rein in India’s ballooning reserves, which surged to a record of more than 14 million tons on Oct. 1 after bumper harvests.

    “This is a golden opportunity for us to export sugar to Indonesia,” said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd., a producers’ group. “Mills just need to shut white sugar production and start making raws in the next two months before the crushing season gets over.”

    1newBloomberg

    Indonesia changed the color specification for raw sugar imports to allow shipments from India, Kasdi Subagyono, director general of estate crops at the Agriculture Ministry said Monday. The government halved the ICUMSA measure to 600, Subagyono said, adding Indonesia needs sugar to meet rising household consumption. While targeted at India, the lower level applies to all suppliers.

    The ICUMSA is the International Commission for Uniform Methods of Sugar Analysis. Most Indian mills make raw sugar with an ICUMSA of as much as 800 and could not ship to Indonesia, which had a level for imported sugar of 1,200.

    Global Prices

    Increasing exports from India may curb the rise in global prices that have surged about 10% this year on concern about production in No. 2 exporter Thailand, hit with its worst drought in 40 years. Sugar exports from the country could drop about 40% to 6 million tons, according to one industry estimate. Raw sugar futures for May in New York rose 1.2% to 15.05 cents per pound on Wednesday.

    “Export contracts have to be signed quickly for mills in Maharashtra and Karnataka to produce raw sugar before crushing ends in about a month,” said Abinash Verma, director general of Indian Sugar Mills Association. “A quick reallocation of export quotas to mills in northern India will help them increase production of raw sugar before crushing ends there in May.”

    2newBloomberg

    The government is considering to transfer export quotas to mills that have exhausted most of their limits and are willing to ship more, from those which are unable to utilize full quotas, the association said on Tuesday. India’s sugar exports may be more than 5 million tons in 2019-20, compared with 6 million tons quota allocated by the government, it said.

    The U.S. Department of Agriculture estimates that Indonesia, the world’s biggest importer of the sweetener, will buy 4.4 million tons of raw sugar in 2019-20.

    Indonesian refiners are waiting for an official notification on the ICUMSA rule before entering import contracts with Indian suppliers, said Bernardi Dharmawan, chairman of the Indonesia Sugar Refiners Association, a group of 11 refiners that only process imported raw sugar for industrial users.

    Indonesia may buy 300,000 tons from India this year, considering poor supplies from Thailand, he said, adding actual purchases depend on prices.



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    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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