New Delhi, Sept 19 - India's expected drop in sugar output and exports should bring cheer to traders in Thailand who stand to clinch bigger deals with Asian buyers such as Japan.
India, the world's biggest producer after Brazil, is expected to see sugar production fall 24 percent to 20 million tonnes in the sugar cane crushing season that begins next month, trade officials say.
Exports from India, also the biggest user of the sweetener, will plummet 78 percent to 1 million tonnes in the new season, they say, creating more room for Thai traders in the market.
"I have the impression that Thailand will definitely try to plug the gap," said Vinay Kumar, director general of the National Federation of Cooperative Sugar Factories.
Traders in Bangkok said buyers in the Middle East were likely to step up purchases of Thai refined sugar and the country had already contracted large export orders for the 2008/09 season that begins in November.
"It is a big amount," a trader, who did not wish to be identified, said about Thai contracted exports for 2008/09.
The cane crushing season in Thailand runs from November to April.
Thailand's buoyant sugar cane output, expected at up to 75 million tonnes in the new season, would help boost exports, traders said.
They said 75 million tonnes of cane production would yield about 7.5 million tonnes of sugar in 2008/09.
"I am quite sure that Japan and some countries in Asia will continue to buy raw sugar from Thailand next year," a Thai trader said. "And I think Thailand can sell more refined sugar to several countries in the Middle East."
But traders in Thailand fear sales to Indonesia might drop as Jakarta was expected to either buy less or halt imports.
"If Thailand hopes to sell to the mills and refineries in the Middle East, definitely it is going to cash in on the void that will be created by India's low exports in 2008/09," said Mukesh Kuvadia, secretary of the Bombay Sugar Merchants' Association (BSMA).
Last year, India entered the raw sugar export market by selling to Dubai's Al Khaleej, the world's largest refinery, which was buying raws from Brazil.
Industry officials say this crop year India has exported 1.5 million tonnes of raws to the Middle East.
Kuvadia said traders in Thailand knew that Indian millers would be lukewarm to exports, which were now less profitable than local sales.
"Ex-mill prices in India are at 16,000 rupees ($345.1) per tonne against about $390 per tonne abroad but if we add transportation costs to ports, mills will not be interested in exports," he said.
Exports are set to fall also because this month India will stop a freight subsidy for overseas sales. The subsidy, launched last year as sugar stocks were bulging, evoked protests from Brazil, Thailand and Australia.
Both India and Thailand could sell some sugar to Pakistan which might face a shortage of up to 800,000 tonnes in 2008/09 when output is estimated between 3.5 and 3.7 million tonnes, down from 4.7 million tonnes in the previous year.
"We have asked the government to ask TCP (Trading Corp of Pakistan) to import raw sugar," said Shunaid Qureshi, chairman of the Pakistan Sugar Mills Association.
Pakistan should import raw sugar as it costs $100 a tonne less than refined, he said, adding the association had proposed the TCP import up to 200,000 tonnes of raw sugar in November. ($1=46.36 Indian rupees)