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| Sugar rally may end next year on higher production |
| Bloomberg / Aug 12, 2009, 00:25 IST |
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Sugar production in India may rebound next year as record prices induce farmers to plant more cane, sparking an end to a “deficit rally” that has driven the commodity to a 28-year high, a producers’ group said on Tuesday.
Output in India, the world’s biggest consumer, may jump as much as 52 per cent to 25 million tonnes in the 2010-2011 season, compared with 16.5 million tonnes estimated for the 2009- 2010 crop year, Prakash Naiknavare, managing director of Maharashtra State Cooperative Sugar Factories Federation Ltd, said.
“Farmers are shifting back to sugar cane because they are getting good prices,” Naiknavare said. “The deficit rally will be over in less than a year’s time.”
Raw-sugar prices have surged 86 per cent this year to a 28-year high in New York on concern that a global production shortfall will widen amid a worsening outlook for cane crops in India, the world’s second-largest producer.
White sugar reached the highest since 1983 in London yesterday, while prices in Vashi, India’s biggest wholesale market, jumped 4.1 per cent to a record Rs 2,901.25 a quintal.
Below-average monsoon rainfall last year reduced yields, turning India into a net importer for the first time since 2006. Output may drop 45 per cent to 14.5 million tonnes this crop year, Naiknavare said. The crop year runs from October 1 to September 30.
Monsoon rains, the main source for irrigation for the country’s 235 million farmers, may be the weakest in five years this year. Rain in the June-September season will be 87 per cent of the 50-year average, compared with 93 per cent forecast in June, the India Meteorological Department said yesterday.
Cane Deficit
The state of Maharashtra, the country’s largest producer, reduced its output forecast for next year to 4.6 million tonnes, down from the 5 million tonnes predicted in June. The state may crush 41 million tonnes of cane in the crop year starting October 1, down 9 per cent from a year earlier, Naiknavare said August 8.
“What we’re going to crush now in 2009 has already been planted 15 months back when the sugar cane prices were discouraging,” Naiknavare said. “The farmers moved to other crops and that’s the main reason why there is a deficit of sugar cane in India.”
India’s raw-sugar imports in the year starting October 1 may be at least 5 million tonnes, double this year’s figure, he said, matching forecasts by Paris-based researcher Sucres & Denrees Group. Domestic sugar availability may total 24 million tonnes in the 2009-2010 season, leaving an inventory of 1 million tonnes for the following year, Naiknavare said.
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