Indian sugar mills are aggressively signing export deals, contracting for about 1 million tonnes just four days after New Delhi approved exports, as they get higher prices for their product in global markets, four dealers said.
The quick shipments from the world's biggest producer of the sweetener and its second biggest exporter, could weigh on global prices, but help Indian mills in liquidating stockpiles quickly and prop up domestic prices.
"The industry was waiting for the government to announce the policy," said a dealer with a global trading house based in Mumbai, the financial capital.
"As soon as the policy was announced, traders and millers started signing export deals," added the dealer, who spoke on condition of anonymity.
India's approval came late on Saturday for the export of 6 million tonnes of sugar in the 2022/2023 marketing year that started on Oct 1.
After the announcement, mills have sealed deals to export about 1 million tonnes of sugar, said Rahil Shaikh, the managing director of exporter MEIR Commodities India.
"Mills are getting a premium of 2,000 rupees to 3,000 rupees per tonne from the overseas sale. So they are very interested in exports," he added.
India was selling white sugar at about $480 a tonne free-on-board (FOB), a discount to London white sugar futures, which were ruling above $534 on Wednesday, for shipments in December to February, dealers said.
Mills are likely to sell the entire allocated quota of 6 million tonnes before the end of December, and shipments could stretch until the end of March, said the Mumbai-based dealer.
India's sugar exports in 2021/2022 touched an all-time high of more than 11 million tonnes, but most of those were from mills in the western state of Maharashtra and neighbouring Karnataka.
Mills in northern Uttar Pradesh, the country's second biggest producer of sugar, are also interested in exports this year for the higher prices they fetch, said a New-Delhi based dealer with an international trading firm.
"This year everyone is interested in exports but the quota is limited," he said.
Producer body the Indian Sugar Mills Association (ISMA) expects that New Delhi could allocate a second tranche of 3 million tonnes for the exports on top of the 6 million tonnes approved, it said in a statement.