India to Miss Sugar Export Target as Lockdown Roils Ports

Date: Tuesday, March 31, 2020
Source: American Journal of Transportation

Sugar mills in India, the world’s third-biggest shipper, will probably miss their export target this year as a nationwide lockdown to prevent the spread of the coronavirus disrupts logistics at ports.

The country won’t be able to ship 5 million tons in the year to September, as expected earlier, because of a shortage of labor at ports and mills, said Adhir Jha, managing director and chief executive officer of Indian Sugar Exim Corp. Indian mills are running out of time to boost raw sugar output without any new export contract at hand, Jha said.

India, struggling with record stockpiles, is seeking to boost sales of raw sugar to countries such as Indonesia and Malaysia to reduce a domestic glut. Any disruption in supplies could support global prices.

“At this time of year, with Brazil harvest starting, the Indian issue is supporting white sugar,” said Michael McDougall, a managing director at Paragon Global Markets in New York.

White sugar futures in London rose as much as 0.9% to $341.90 per ton, while raw sugar in New York climbed as much as 1.1% to 11.45 cents per pound.

Though Indian ports are exempted from the lockdown, many workers are grappling with transport problems and have left for their hometowns. Factory operations are also affected. The shortage of truck drivers and loaders is also hurting prospects for new overseas sales as foreign buyers step back and wait for the situation to stabilize, Jha said in a phone interview.

Indian mills have contracted to export about 3.5 million tons since Oct. 1, Jha said. Of that, more than 500,000 tons are still to be shipped, he said.

“Ports are not working properly as labor intensive operations are stalled,” said Rahil Shaikh, managing director of trading company Meir Commodities India Pvt. “The contracts will only be executed once the Covid-19 situation becomes normal, and till then the force majeure clause has to be invoked.”

India could export 300,000 tons of low quality white sugar each month between May and September after the crushing season ends in middle of May, if things return to normal, Shaikh said.

 

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