India, the biggest sugar user, may permit exports of 500,000 tonnes as output tops demand for the first time in three years and after food inflation slowed to a two-month low, industry officials said.
The government may take a decision as early as this week, Jonathan Kingsman, managing director of broker and researcher Kingsman SA, and Abinash Verma, -director-general of the Indian Sugar Mills Association (ISMA), told a conference in Dubai yesterday.
Supplies from the country may help cool food costs, which reached a record high last month, according to the UN’s World Food Price Index. Raw sugar soared to US$0.3608 per pound (0.45kg) in New York on Feb. 2, the highest level since 1980, on concern that global supplies will lag demand after a storm in Australia and drought in Russia crimped harvests.
The global market “has become viable for exports from India at a time when the country has a surplus,” Verma said.
May-delivery raw sugar fell 1.5 percent to close at US$0.2842 a pound on ICE Futures US in New York on Friday. Prices have doubled since the end of May last year.
India allowed the shipment of 500,000 tonnes under the so-called open general license in December and then kept the plan on hold because of high food costs. An index measuring wholesale prices of farm products including rice and vegetables rose 11.05 percent in the week ended Feb. 5 from a year earlier, the trade ministry said in a statement last week. The measure gained 13.07 percent the previous week.
The country’s production may total 24.5 million tonnes, more than the demand of 23 million tonnes, for the season ending Sept. 30, according to the government.
Output for the period may be 25 million tonnes, exceeding consumption of 22.1 million tonnes, Verma said.
There may be a surplus of 6.7 million tonnes on Sept. 30, of which 5 million tonnes will be carried over into the new crop year from Oct. 1, he said.
That leaves 1.7 million tonnes for sales overseas, he said.