Indian, Thai sugar flows to slow to Myanmar for China | Reuters - Firstpost
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Indian, Thai sugar flows to slow to Myanmar for China | Reuters

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LONDON Indian and Thai white sugar exports to Myanmar, a gateway for smuggling into China, are set to slow further as harvests finish early due to drought and Indian domestic prices surge, diverting sugar to the local market.

Indian mills, believed to be the main source of white sugar for Myanmar after gaining market share as Thai supplies ran out, are expected to prioritise the local market due to a jump in domestic prices, traders said.

Chinese white sugar demand has remained strong in recent weeks, underpinning a whites-over-raws refining premium of just over $100 per tonne, a comfortable margin for refining.

Flows of white sugar to Myanmar started to decline following a crackdown on smuggling into China.

Volumes of white sugar shipped to Myanmar soared last year due to a jump in smuggling to China because of high domestic prices in the world's top sugar buyer.

"After a sudden rise in prices here (in India), there is no export parity at all. It's a fact that most of our sugar exported so far in the current season has gone to Myanmar and to China via Myanmar," said Praful Vithalani, who owns Indian brokerage Jagjivan Keshavaji.

"Clearly there's more potential for exports to Myanmar and China but as prices firm up here, I do not see India exporting, at least for now. If global prices go up further, I do see India taking advantage of falling supplies from Thailand."

Drought has eroded sugar yields in India and Thailand, leading industry analysts to revise down output estimates.

A senior Thai government official said he saw limitations in India's capacity to export sugar.

"India is facing drought as well (as Thailand). India's output this year is also lower than predicted, and will mostly go to domestic consumption," said Boonthin Kotsiri, production director at Thailand's Office of Cane and Sugar Board.

One senior analyst said India exported more than 900,000 tonnes of white sugar to Myanmar from October 1 2015 to March 31 2016 (i.e. the first half of 2015/2016 (Oct-Sept)), while Thailand exported 475,000 tonnes to Myanmar in the same period.

Most of the sugar was believed to have been smuggled into China, trade sources said.

Analyst Green Pool said in its latest weekly report that only 20 Thai mills remained operational (32 had shut) as the harvest wound down, compared to 30 at this time last year.

(Additional reporting by Mayank Bhardwaj in India and Patpicha Tanakasempipat in Bangkok; Editing by David Evans)

This story has not been edited by Firstpost staff and is generated by auto-feed.

First Published On : Apr 5, 2016 00:30 IST

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