A sharp drop in the Brazilian real has thwarted India's efforts to step up raw sugar exports despite New Delhi's decision to give an incentive to boost shipments, industry officials said.
Lower exports from India, the world's biggest sugar producer behind Brazil, could help to revive benchmark New York prices that touched a six-week low on Wednesday.
The Brazilian real has dragged down global sugar prices but the Indian rupee has not fallen by the same proportion to boost Indian exports, Yatin Wadhwana, managing director of Sucden India, told Reuters on the sidelines of the India Sugar Forum conference.
On Wednesday the Brazilian real fell to a 10-year low against the dollar.The lower real raises returns for Brazilian exporters because sugar is priced in dollars, but the currency's weakness and lower global sugar prices have dented Indian export plans.
"When subsidy was announced (by India) there was a lot of optimism, but the subsequent fall in the real has made exports difficult," said a Mumbai-based dealer with a global trading firm.
After months of wavering, India decided in February to give mills a subsidy of Rs 4,000 ($64) a tonne for exports of up to 1.4 million tonnes in an effort to reduce stockpiles after five years of surplus output.
Indian mills have been contracted to export an extra 20,000 tonnes of sugar, a number of dealers said.Though mills sealed deals to export 50,000 tonnes of sugar since the subsidy was agreed, dealers expect the annual figure to be less than 500,000 tonnes.
Indian raw sugar prices have fallen to $330-$340 a tonne from $465 a few weeks ago.As a result, very few mills are producing raw sugar, the Mumbai-based dealer said.
So far Iran, India's biggest buyer last year with purchases accounting for almost half of the country's total raw sugar exports of more than 1 million tonnes, has not placed an order.
Source:- economictimes.indiatimes.com
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