Agro Perspectiva

Trading firms may supply Indian sugar to Pakistan

11.08.2010 12:44 "Agro Perspectiva" (Kyiv) — India may export 320,000 tonnes of sugar to Pakistan, its first shipment to the neighbouring country in two years as local output is set to jump after higher cane planting and adequate monsoon rains. Two sources familiar with the deal said on Monday that India may supply the white sugar to trading firms, which are selling the sweetener to Pakistan. India, the world’s top sugar consumer and the biggest producer behind Brazil, is expecting a rebound in local output, which will encourage to export after importing large quantities last year. Last week Pakistan awarded contracts to import 320,000 tonnes of white sugar from Singapore’s Agrocorp International and Dubai’s Sucden Middle East. «These two export deals may have an option of Indian sugar. Supplying Indian sugar will be very attractive for the companies,» an official with a Mumbai-based trading firm, told Reuters. Traders in Karachi also said Indian sugar was likely to be shipped to Pakistan. «The news on the street is that the sugar — 250,000 tonnes from Agrocorp and 70,000 tonnes from Sucden — will originate from India,» said a Karachi-based trader, familiar with the tendering process, who declined to be identified. India last year imported large quantities of sugar, contributing to a surge in New York raw sugar futures to the highest level in 29 years in February. The country was expected to resume exports only in the new sugar season that starts in October. Traders said India’s export of sugar to Pakistan would be bearish for the market. «If it is coming from India, then that is opening up a potential new avenue for imports other than from Brazil,» said Nick Penney, a sugar futures broker with Sucden Financial Sugar in London. If the origin of the latest sugar for Pakistan is the silo at the Dubai Al Khaleej refinery, however, this would be market-neutral, dealers said. London October white sugar was up $0.20 at $540.00 per tonne. Traders say India had last exported about 70,000 tonnes of sugar to Pakistan in the 2007/08 season. Output in the next season is expected to rise to 25.5 million tonnes from 18.8 million in 2009/10 after higher domestic sugar prices in 2009 and early this year encouraged farmers to grow more cane, the Indian Sugar Mills Association said. Industry official say hopes of good output in the new season from October would encourage mills to sell more. In February last year, India allowed mills to import duty-free raws on condition that the same consignment would be processed and exported within three years under a provision called the «grain-to-grain» scheme. Later, India allowed free imports of raw and refined sugar until December 2010 without any export obligation. «I see export deals taking place under the grain-to-grain scheme,» another trader said referring to the permission given to mills in February 2009. Farm Minister Sharad Pawar has said he may consider slapping an import tax after reviewing the cane area in August. Traders and industry officials say they believe some Indian mills with an export obligation would like to strike overseas sale deals to ship out whites when demand rises in Asia. Both Pakistan and Indonesia need to import sugar. Indian millers also want the government to allow exports of about 750,000 tonnes of imported sugar, which has piled up at a key port due to a shortage of railway wagons.