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Container shortage slows Indian sugar exports, fuels price rally

Rajendra Jadhav
·2-min read
A sweeper cleans a road in front of sugarcane displayed for sale at a wholesale market in Kolkata

By Rajendra Jadhav

MUMBAI (Reuters) - India's sugar exports could fall by 12% to 5 million tonnes this year as a shortage of containers slows trade and threatens to drive up global prices that are already at four-year highs, industry officials told Reuters.

The lower exports from the world's second biggest sugar producer, especially during the first half of 2021, could also allow rival Brazil to increase shipments in the second half of the year when Brazil does the bulk of its exporting.

"The container shortage is limiting our exports," said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd. "We have signed exports contracts for about 3 million tonnes but managed to ship only around 1 million tonnes."

India could export 5 million tonnes of sugar in the 2020/21 season ending on Sept. 30, lower than last year's 5.7 million tonnes, he said.

That is less than the government target as the south Asian country has approved a subsidy of 5,833 rupees ($80.55) a tonne for exports of 6 million tonnes in the current year.

India has experienced a shortage of containers since November as its imports, especially from neighbouring China, fell because of the pandemic and geopolitical tensions.

Exporters of commodities ranging from soymeal to cotton are finding containers and space in vessels are unavailable even at higher cost, Rahil Shaikh, managing director of MEIR Commodities India, said.

The scarcity is likely to persist for the first half of 2021, when traditionally India does most of its sugar exporting, a Mumbai-based dealer with a global trading firm said on condition of anonymity.

After June, the monsoon season makes shipment difficult.

Traders say they have been offering Indian white sugar at between $400 to $415 a tonne on a free-on-board (FOB) basis, a discount to London futures which were trading around $480, while raw sugar is offered around $400.

India exported around 300,000 tonnes of sugar in January, mainly to Afghanistan, African countries, Indonesia and Sri Lanka, down from more than 700,000 tonnes in January 2020, dealers estimate.

(Reporting by Rajendra Jadhav; editing by Barbara Lewis)