After ET first reported Indian sugar mills defaulting on their export contracts signed earlier than the federal government introduced the export coverage, world sugar prices have rallied. Defaults indicated that Indian sugar might not come low-cost as millers demanded upward revision in costs. However, the worldwide rally has now led to extra defaults by the millers, slowing down the velocity of Indian exports, prime exporters of the nation stated.

“After the report about default by Indian millers, the market went up by $20-25/tonne as buyers were getting a signal that Indian sugar may not come at a lower rate,” stated an exporter from Pune district in Maharashtra, including, “Although agency world costs are good for Indian exports, after wanting on the new provides, defaults have elevated once more.”

Defaults have been reported from Maharashtra, Karnataka and Gujarat, stated exporters.

Global sugar costs had began shifting upwards after India introduced its export coverage within the first week of November, allowing export of solely 60 lakh tonnes of sugar as towards 112 lakh tonnes exported in 2021-11. This was adopted by stories about some decline in 2022-23 sugar manufacturing of Brazil.

“Mills are defaulting in many ways. Refusing to honour the contract, some mills are selling sugar to other buyers who are willing to offer higher prices, some mills are offering lower than the contracted quantity of sugar, while others are asking for higher than the contracted rate,” stated the highest government of one of many largest sugar export homes based mostly in south Maharashtra.

According to trade sources, Indian exporters have thus far contracted about 35-40 lakh tonnes of sugar exports.

“Defaults have slowed down the pace of signing export deals, which have reached around 40 lakh tonnes till date. Had there been no defaults, India could have contracted to export the entire 60 lakh tonnes of quota allowed by the government,” stated a sugar dealer from an MNC export home, who didn’t wish to be recognized.