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Brazil move worries exporters

THE domestic sugar industry is worried over Brazil's recent decision to reduce the ethanol content in its gasoline output from 24 per cent to 20 per cent, which is expected to release more cane for sugar production, thereby augmenting sugar availability in the global market by around 1.6 million tonnes.

``We are worried, since this would arrest the possibility for any further hardening of global sugar prices, which would affect the profitability of our own exports'', said Mr. Prakash Naiknavare, Managing Director of Maharashtra State Cooperative Sugar F actories' Federation Ltd.

In fact, ever since Brazil's announcement on August 4, the benchmark London spot daily price, which hit a 29-month high of $279 per tonne the same day, has fallen to around $272 per tonne. ``Given the new development, we should realistically not expect p rices to go beyond the $275 per tonne mark in the near term'', Mr. Naiknavare added.

Brazil's move to reduce the ethanol content in gasolene and divert its sugarcane for sugar production will enable it to partially reverse the likely dip in exports resulting from this year's poor cane harvest.

The country is expected to export only 5.5 million tonnes of sugar, as against the last year's record 11 m.t. and it is this drop in exportable surplus that has primarily been fueling the recent recovery in international prices.

Meanwhile, the Indian Sugar and General Industry Export Import Corporation (ISGIEIC) will be opening its tender inviting bids from international buyers for the purchase of 2.5 lakh tonnes of sugar on Friday. The Corporation has already sourced this quant ity from domestic factories through a tender it had floated in end-June, for which the validation period had ended on July 29.

``The tender to be opened on Friday is an international tender seeking bids from parties keen to buy sugar from India. What was floated earlier was a domestic tender amongst factories here for sourcing the 2.5-l.t. exportable quantity'', an ISGIEIC spoke sman said.

He said the Corporation had already committed for an export consignment of 25,000 tonnes to Bangladesh, which was outside the present international tender's purview. ``We have already tied up with the concerned importing parties in Bangladesh for this qu antity. The first vessel for carrying 14,000 tonnes will be berthing in Mumbai Port on August 18 and will be shipped out before the month-end. We have contracted a price of $260 per tonne c.i.f Bangladesh for the 25,000 tonnes of sugar exports'', the spo kesperson added.

ISGIEIC hopes for better price realisations in the subsequent export consignments, even as the latest Brazil move has somewhat mellowed sentiments. Whether the bids to be opened on Friday will bear this out remains to be seen.