Indian sugar mills association

Sugar output rises 15% this season, may cross forecast

Date:	02 Mar 2012

Source:	The Financial Express

Reporter:	FE Bureau

News ID:	958

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New Delhi: India`s sugar output jumped 15% until end-February on higher cane crushing, brightening hopes that production in the year through September will exceed the official estimate.

Sugar output in India rose to 18.65 million tonne since October 1, compared with 16.25 million tonne a year before, showed data released by the Indian Sugar Mills Association (Isma) on Thursday. Higher production in key states such as Maharashtra, Uttar Pradesh and Andhra Pradesh is expected to raise the production beyond the food ministry`s forecast of 24.7 million tonne in 2011-12, said industry executives.

The food ministry had predicted sugar output of 24.6 million tonne earlier this year, compared with the expected consumption of around 21.5 million tonne. However, while Isma has said production will likely rise to 26 million tonne. The country is expected to become sugar-surplus in 2010-11 with production level reaching 24.3 million tonne after two successive years of a domestic shortage when the country was forced to import the sweetener to improve supplies.

Production in Maharashtra went up 14% to 6.49 million tonne, while output in Uttar Pradesh gained 13% to 5.27 million tonne since October, showed the data. Andhra Pradesh saw output rising 20% to 8,71,000 tonne, while Karnataka and Tamil Nadu have also reported higher production so far. Although Uttar Pradesh grows the largest volume of sugarcane, lower recovery makes it the second-largest sugar-producing state in the country.

As many as 520 sugar mills were crushing cane as of February 29, compared with 480 a year before.

Higher output brightens sugar exports prospects during 2011-12 beyond the two million tonne already allowed by the government in two equal tranches. Industry executives say the country has potential to ship out 3 million to 4 million tonne of sugar in 2011-12.

Raw-sugar futures on the InterContinental Exchange for March delivery fell 1.7% to 25.66 cents a pound on Wednesday, sharply off their peak of 36.08 cents a pound on February 2. But exports are still more lucrative as domestic wholesale prices have remained subdued around 8 months now due to adequate supplies. Wholesale prices of the S30 variety in Mumbai are ruling around R3,000 a quintal.

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