• India has increased domestic prices making exports harder.
  • If the government doesn’t change export incentives/punishments in the coming weeks, 5m tonnes of exports look unlikely.
  • However, stocks and cane arears increasing drastically means that the government is under pressure to ensure exports and might makea change to policy. 

Domestic Prices Raised 

  • India has increased domestic prices by INR2,000/mt (USD28/mt).
  • Although we are still seeing residual offers at old levels, this effectively raises export levels to 14c/lb and $340/mt for raws and whites respectively.
  • We have seen the domestic market and world market react positively to the news in the past couple of days. 

Indian Domestic Prices vs No 5 

What does this mean for exports? 

  • The increase in domestic prices increases the difficulty for exporting both raws and white sugar.
  • Based on current prices, government incentives and past shipment rates it looks increasingly unlikely that the full 5m tonne export program will be completed.
  • However, if exports don’t occur stocks and cane arrears will increase further to unmanageable levels. 

Indian Stocks are Building 

  • With an election coming up, ensuring the farmers are happy and paid is very important for government support.
  • We therefore think that the government will make amendments to ensure 5m tonnes of exports.
  • However, if this doesn’t occur before mid-March we will be forced to reduce our export expectations as the government will no longer be able to make changes to policy so close to an election. 

Reduced Brazilian Raws Demand 

  • Indian coastal refiners have reduced their demand for Brazilian mills in the past few months in favour of domestically produced feedstock.
  • We expect this to continue due to lower freight and reduced costs of freight.
  • On top of this we hear refiners have been able to buy old crop, poor quality Indian sugar at a discount, increasing profitability.
  • We are therefore estimating coastal refiners demand for domestic sugar to increase to 1.75m tonnes, 400k tonnes of which has already been bought. 

India Mills – 18/19 Export Progress 

  • This reduces the demand for Brazilian raws throughout the season while keeping throughput and therefore exports as usual. 

Indian Refinery Raws Demand 

Unwavering Support to Sugarcane Farmers? 

  • The Indian Government has come out with various policies and measures to support the sugar industry.