India frees sugar exports, global prices fall
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India has lifted for now volume limits on sugar exports, a government source said on Wednesday, adding pressure to global prices, but the world's second-biggest producer could reinstate restrictions at a later date.
Ministers had met on Wednesday to sort out conflicting policies on sugar and farm product exports after a series of policy flip-flops and delays to implementing overseas sales had kept global markets on edge.
Farm Minister Sharad Pawar, a powerful ally of the fractious coalition government, had called for more sugar exports beyond the 3 million tonnes already approved for the year to September 30 while the food ministry had dithered on an allocation mechanism.
"Sugar exports have been freed and there will not be any quantitative restriction, but we will stop it (exports) once it reaches a particular level," the government source told reporters on condition of anonymity.
India took a similar line on wheat and rice exports late last year, removing restrictions on sales but tacitly eyeing a limit in case global demand threatened domestic supplies.
Raw sugar futures sank to near a 1-year low at 20.60 cents a lb by 9:08 p.m. IST, pressured by the potential extra exports and the start of harvest in Brazil.
Sugar prices are depressed already at the moment, as harvest starts in the world's largest producer, Brazil.
India's government remains anxious over sugar supplies as it had to import the sweetener after a severe drought in 2009, sending international prices spiralling.
"This a long awaited, positive step which will help the industry and farmers," said Narendra Murkumbi, managing director of Shree Renuka Sugars, the country's biggest sugar refiner.
Copyright @ Thomson Reuters 2012