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| India a major engine to drive world sugar prices |
| Dilip Kumar Jha / Mumbai Dec 24, 2009, 00:17 IST |
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Despite an 11 per cent increae projected in the sugar output, India will be the major engine for growth in world sugar imports, Food and Agriculture Organization (FAO) of the United Nations said in its latest report.
FAO estimated India’s sugar output to rise 11 per cent this year to 17.5 million tonnes. But, the current forecast is below the initial estimates as prospects were marred by poor monsoon rain during the critical months of June and July.
Despite a fall in planted area in the major sugarcane producing region of Uttar Pradesh, production may benefit from the higher statutory minimum price paid to growers, which is expected to result in a greater allocation of cane into centrifugal sugar production, at the expense of local non-centrifugal sweeteners namely gur and khandsari. Still, production is anticipated to fall short of expected consumption for the second consecutive year.
FAO believes that India’s sugar imports would depend on the quantity of production within the country coupled with price behaviour of the sweetener in global markets. However, forecasts at this early stage of the season are subject to much uncertainty. For instance, an unexpected easing of world sugar prices or a further depreciation of the dollar could lead to a stronger import demand.
Meanwhile, world sugar imports are forecast to reach 52 million tonnes in 2009-10 (October-September), 5 per cent more than in the previous season, driven largely by the need to replenish stocks and offset production shortfall.
Policy measures to dampen the effect of current high prices, such as temporarily removal of tax or import duties, limits on stock holdings and retail price control, had helped in sustaining sugar intake in several net-importing developing countries.
India’s foodgrain output was hit by the irregularity of monsoon rain beginning with drought or below average rainfall, followed by torrential rain and floods, bringing about a sharp reduction in the main kharif crop output. Although the area under the 2009 secondary rabi crop, now at the planting stage, is likely to be raised, the country is expected to harvest 128 million tonnes of paddy (85 million tonnes, milled basis) over the full 2009 season, 21 million tonnes or 14 per cent, less paddy from the previous year.
World’s leading organisation on hunger estimates India’s wheat output to rise a marginal 2.6 per cent to 80.6 million tonnes as compared to 78.6 million tonnes in the previous year.
Given this year’s record production level and ample stocks, the government recently announced that it was not planning to import wheat for the time being.
FAO believes India may import 100,000 tonnes of rice, as high international prices and the fact that the government can draw from its large rice and wheat stocks to compensate for the 2009 rice production shortfall, limit the chances of greater imports.
By contrast, exports are predicted to fall to 2 million tonnes, where the government is likely to maintain its tight restrictions on external sales, allowing only basmati rice shipments. In India, soybean plantings are expected to remain low, as producers are wary of continued competition from low-priced imports of vegetable oils. Vegetable oil import may decline 10 per cent in 2009-10 due to high stocks, the report said.
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