Q+A-Can India Allow More Sugar Exports in 2011/12?.

NEW DELHI Nov 25 (Reuters) - India, the world's top sugar consumer and the biggest producer behind Brazil, has allowed mills to export one million tonnes of the sweetener, kicking off exports for the 12 months beginning October 1, 2011.

A doubling of an initial estimate of 500,000 tonnes for exports is being seen as sign of confidence that the country will have a reasonably good surplus this year and could allow further overseas sales.

Here are a few questions and answers on whether Indian could export more sugar.

HOW MUCH CAN INDIA EXPORT?

India is poised to produce 25-26 million tonnes of sugar in 2011/12, and after meeting domestic demand, about 4 million tonnes could be available for staggered exports.

WHAT PRICE DO INDIAN MILLS, EXPORTERS EXPECT?

Most traders believe buyers will try to negotiate at $600 a tonne free on board (FOB). But Indian exporters will push for $630-$650 per tonne, possibly arriving at a deal price of $625

for 150 ICUMSA white sugar.

This price will be lower than the $670 per tonne FOB fetched in April. The slide in price is owning to an improved production outlook. India mostly sells 150 ICUMSA sugar, a lower grade sugar.

An ICUMSA (International Commission for Uniform Methods of Sugar Analysis) rating is a global unit to measure the purity of the sugar. Higher the ICUMSA the lower the quality.

Indian sugar usually competes with Brazilian supplies in Asian and African markets. Supplies from the European Union and Thailand dominate global markets for premium sugar. The EU produces refined sugar having 45 ICUMSA value.

WHERE WILL INDIA EXPORT?

India usually exports to countries such as the U.A.E., Kenya, Vietnam and Bangladesh. But this year it is likely to find some new markets in Asia such as Indonesia and China, with the latter expected to replenish its stocks. China's supply gap is estimated at 2 million tonnes and Indonesia is expected to buy about half a million tonnes in 2012.

India exported 2.6 million tonnes of sugar in 2010/11, including 1.5 million tonnes of unrestricted exports.

WHEN WILL INDIA ALLOW THE SECOND TRANCHE OF EXPORTS?

Trade and industry officials believe the government will allow the next tranche of exports only after allocating export quotas to mills and getting a clear output estimate with the end of the peak crushing season. The whole process may take two to three months.

Most mills have already started working and cane crushing will gain momentum next month. By April, most mills run out of cane and down shutters.

HOW MUCH CAN INDIA EXPORT IN 2011/12?

The government believes India will have an exportable surplus of three million tonnes this year, one million tonnes less than the industry forecast.

The Indian Sugar Mills Association, a producers' body, had asked the government to permit as high as four million tonnes of exports in a phased manner .

Source : af.reuters.com