New Delhi: India’s sugar production in the next marketing year starting October may decline 5%, but surplus stocks will still enable India to export for a third straight year, a senior executive at the International Sugar Organisation said on Tuesday.
“Initial signs suggest that India — the world’s second-largest sugar producer and biggest consumer — may produce around 24.5 million tonne in 2012-13, compared with 25.8 million tonne this year,” said ISO senior economist Sergey Gudoshnikov. India typically needs around 21.5 million to 22 million tonne for annual consumption, which also means domestic prices may continue to remain subdued for another year.
India, the world’s second-biggest sugar producer and largest consumer, resumed sugar exports in 2010-11 after two successive years of a domestic shortage when the country was forced to import the sweetener to improve supplies. The government has allowed sugar exports of three million tonne so far this year, and an empowered group of ministers will consider permitting more shipments of the sweetener on Wednesday.
The ISO’s estimate of India’s sugar production in 2011-12 is higher than the food ministry’s forecast of 25.5 million tonne but lower than the Indian Sugar Mills Association’s (Isma’s) projection of 26 million tonne. Production rose 13% to 24.98 million tonne until April 22 on higher cane crushing in Maharashtra and Uttar Pradesh, according to the Isma data.
Top sugar industry bodies — Isma and National Federation Of Co-operative Sugar Factories (NFCSF) — have also said the country’s sugar production will likely exceed demand in the next marketing year, providing adequate leeway to the government to allow exports.
Isma director general Abinash Verma said, “It is certain that production in ensuing season 2012-13 will be higher than the domestic consumption and India will continue to export sugar.” NFCSF managing director Vinay Kumar said, “Based on current sowing, sugar production in 2012-13 would touch 25 million tonne.”
Sugarcane planting for the 2012-13 sugar season has risen by 2% to 4.41 million hectare so far. Sugarcane is sown in summer and harvested from mid-September.
US raw sugar futures crashed 27% in 2011, the first annual fall in four years, as higher output in Asia and Europe offset a decline in production in biggest producer Brazil. Global sugar production will surpass demand by 5.17 million tonne in the marketing year through October 2012 after around two years of a shortage, according to the International Sugar Organisation. However, exports are still more remunerative as domestic wholesale prices have remained subdued more than six months now due to adequate supplies. Wholesale prices of the S30 refined sugar variety in Mumbai are ruling around R3,000 to R3,300 a quintal.
“Global sugar surplus may halve to 3 million tonne in 2012-13,” Gudoshnikov said, which will likely benefit India if it decides to export next year as well. Higher-than-expected output from China and Thailand will likely drive up the current year’s surplus to up to 6 million tonne from 5.2 million tonne estimated in February, Gudoshnikov added. The ISO is expected to announce its revised figures on May 11, he said.
Addressing the conference, finance minister Pranab Mukherjee asked the global sugar industry to initiate steps to curb price volatility of the sweetener. He also said, “I would like the ISC (International Sugar Council) to examine and analyse the information system on demand and supply, international policies and the trade competitiveness for realistic estimate of sugar production.”