Exports from the world's biggest sugar producer could put pressure on global prices but will help India reduce its inventories that have driven down domestic prices.
Indian
mills are aggressively selling old season sugar to Iran after New
Delhi announced a subsidy to help cash-strapped mills export a
surplus, five traders said, asTehran strives to secure food supplies
under US sanctions.
Exports
from the world's biggest sugar producer could put pressure on global
prices but will help India reduce its inventories that have driven
down domestic prices.
Trading
houses have contracted to export to Iran about 350,000 tonnes of
sugar for shipments landing in October to December at about Rs 21,600
($302) a tonne on a free-on-board basis, the trade sources said this
week.
They
have contracted another 150,000 tonnes for destinations like Sri
Lanka, Afghanistan and African countries at around $315 per tonne for
shipments in the last quarter of 2019, they said.
On
international markets, December white sugar settled at $347.60 a
tonne on Wednesday.
"Sugar
millers in Uttar Pradesh are quite active this year. They are selling
sugar to Iran in rupee terms," said Rahil Shaikh, managing
director of MEIR Commodities India.
Under
US sanctions, Iran is blocked from the global financial system,
including using US dollars to transact its oil sales. Iran agreed to
sell oil to India in exchange for rupees
but it can only use those rupees to buy Indian goods, mainly items it
cannot produce enough of domestically.
Sugar
mills in the landlocked northern state of Uttar Pradesh, the biggest
sugar producer in the country, traditionally export less quantity as
they need to spend more to bring it to ports on the western coast.
But
this year they are actively exporting due to simplified export
procedures and because of the huge inventory mills have been carrying
from the last year's record harvest, said a Mumbai-based dealer with
a global trading firm.
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