After lack of orders, govt extends sugar export quota date to December-end

After a tepid response from buyers abroad, the central government has extended the time given for sugar export under the 'Minimum Indicative Export Quota' (MIEQ) by three months, until end-December.    

Issued first on May 9, the government told mills to ensure a combined two million tonnes of sugar export by September 30, on the basis of allocated quantity. The idea was to cut a glut, at the state-set prices, in the home market.  

The latest notification from the ministry of food also said the actual export might be completed in the coming, 2018-19, sugar season (which begins October 1 and goes on until the next September 30). 


However, even after these benefits, export was unviable at the current low global prices. "Extension of the timeline is a good and timely move. Since raw sugar would be available only after commencement of new-season crushing in October, the MIEQ extension would help mills export raw sugar produced between October and December," said Sanjay Khatal, managing director, Maharashtra State Federation of Co-operative Sugar Factories.

Mills were able to attract orders for only 400,000 tonnes in all. The benchmark Sugar 11 contract on the Chicago Mercantile Exchange reported a decline of 13.3 per cent to trade at 10.13 cents a pound on Thursday, compared to 11.69 cents a pound on May 9, the day of the first MIEQ order issued by the Government of India. 

Also, since May 9, sugar prices have declined by $45 a tonne in the international markets; they are now $305 a tonne. In May and June, mills would have had to lose Rs 7-8 a kg on export; this loss would now be Rs 10.5-11.5 a kg.    

"The government has not changed any export guidelines or offered any new incentives," complained a senior industry official.

The central government has fixed a minimum selling price for sugar at Rs 29 a kg to stop a slide in prices. With an estimated carryover stock in excess of 8 million tonnes (MT) from the current season, sugar production is estimated at 35-35.5 MT for 2018-19, as against 32.25 MT for 2017-18. Home consumption is estimated at 25 MT in a year. 

Export woes

  • Govt allows 2 mt of MIEQ sugar exports for three more months
  • Prices have fallen over 13% since May, when MIEQ was announced for the first time 
  • Exporters have been able to export only 400,000 tonnes so far
  • Further exports unlikely given there has been no change in export rules
  • Exporters anticipate Rs 12-13 a kg loss in MIEQ sugar exports