Robust exports help UP sugar mills fetch 10% premium in export quota sale

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Robust returns on sugar exports helped sugar mills from Uttar Pradesh to trade their export quota at a premium of about 10% over the prevailing market price for export of white sugar. According to trade sources, UP mills have sold 5-6 lakh tonnes of their export quota at an average price of Rs 4/kg.

The 2022-23 sugar export policy announced this month allows a sugar mill to swap its export quota with the domestic sales quota of another sugar mill. Trade insiders said that though some exporters have purchased the export quota, others want the government to clarify if the policy allows for trading of the export quota.

Multiple sources that ET spoke to in the Indian and MNC export community did not want to be identified. One said “Some exporters from the western coast have purchased export quotas of about 5-6 lakh tonnes from sugar mills from Uttar Pradesh. The rate at which the export quota is being traded is between Rs 3.50/kg to Rs 4.50/kg.”

Traders told ET that the sugar mills from Uttar Pradesh are more interested in doing direct export of refined sugar, which is selling at about Rs 39-40/kg as against Rs 37/kg being quoted for the low-grade white crystal sugar. “Instead of exporting the white sugar, it is more profitable for the UP mills to sell their export quota at a premium. Thus, the UP mills have booked this premium on the sugar they haven’t produced yet,” said a trader from the MNC trade house, quoted above.

“As the international market is good, it is accepted that the one who sells the export quota will ask for share in the profits that the exporter will make,” said a leading sugar miller from Uttar Pradesh.

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