INDIA IN THE GLOBAL SUGAR MARKET

KIRAN WADHWANA

DIRECTOR

COMDEXINDIA LTD.

INDIA IN THE GLOBAL SUGAR MARKET

• HOW BIG IS INDIA IN THE GLOBAL SUGAR MARKET?

• HIGH YEAR END STOCKS?

• WHAT CAN INDUSTRY DO TO REDUCE YEAR END STOCKS AND INCREASE EXPORTS?

• CONCLUSION…

12/13 13/14 14/15*

182,148

180,805

182,566

171,236

175,149

179,186

World Production and ConsumptionRaw Value in ‘000 MT

Production Consumption

* Estimated Source: PLATTS

Brasil20%

India16%

China6%

Thailand6%

Rest of the World51%

Production % for Major CountriesEstimated for 2014/15 crop year

Source: PLATTS and ISMA

11/12 12/13 13/14 14/15*

WORLD 11664 22576 28196 31572

INDIAN 6931 9762 7875 11025

2,500

7,500

12,500

17,500

22,500

27,500

32,500

Year End World & Indian Sugar Stocks Raw Value in '000 MT

Figu

res

in '0

00 M

T

Source: PLATTS and ISMA* estimated

12/13 13/14 14/15*

INDIAN 9762 7875 11025

BRAZILIAN 1260 595 419

THAI 1283 3216 3203

CHINESE 6788 9812 9879

1,000

3,000

5,000

7,000

9,000

11,000

Year End Indian, Brazilian, Thai & Chinese Sugar Stocks Raw Value in '000 MT

Figu

res

in '0

00 M

T

Source: PLATTS and ISMA* estimated

Brazil43%

Thailand14%India

2%

Rest of the World41%

Export % of Major CountriesEstimated for 2014/15 Crop Year

Source: PLATTS

MAJOR REASONS FOR HIGH YEAREND STOCKS & LOW EXPORT VOLUMES

• HISTORY OF SHORTAGES

• MILLS ALWAYS CARRIED THE STOCKS

• VERY LITTLE HEDGING/FORWARD SALES– MILLS IN BRAZIL AND THAILAND SELL/HEDGE 30% TO 40% PRODUCTION

BEFORE START OF SEASON

• SHORT TERM EXPORT POLICY

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SITUATION OF INDIAN SUGAR INDUSTRY

Mill Owner

WHAT CAN BE DONE TO REDUCE YEAREND STOCKS & INCREASE EXPORT VOLUMES

• FORWARD SALES– MILLS SHOULD SELL SOME PORTION OF THE SUGAR AT THE START OF THE

SEASON

• INCREASE HEDGING

• MOVE FROM BEING FLAT PRICE EXPORTERS TO BASIS EXPORTERS

• LONG TERM EXPORT POLICY

NCDEX Prices for March 2016 Sugar M Contract

Source: NCDEX

CONCLUSION

WE MUST HAVE A POLICY OF SURPLUS AND NOT DEFICIT AND MOVE TOWARDS AGGRESSIVE EXPORTS THROUGH BASIS SELLING AND A LONG TERM EXPORT POLICY.