Sugar output in India to drop on dry weather

The harvest will fall 6.5% to 23 mn tons in the year starting October 1 from 24.6 mn tons this year

Sugar output in India, the biggest producer after Brazil, is set to decline for a second year as a drought curbs planting, potentially increasing imports.

The harvest will fall 6.5 per cent to 23 million tons in the year starting October 1 from 24.6 million tons this year, according to the median of estimates of four traders, an analyst, a producer and an industry official compiled by Bloomberg. That would be less than the local demand of more than 24 million tons in 2013-2014, said Narendra Murkumbi, managing director of Shree Renuka Sugars, India's biggest refiner.

Sugar has slumped 50 per cent in New York since reaching a three-decade high in February 2011, as production from Brazil to Thailand and China increased, widening a global glut. Falling Indian production after three years of surplus may boost imports and help curb a slide in prices, which has partly helped global food costs tracked by the United Nations' Food & Agriculture Organisation to fall for a fifth month in February.

“India affects the world market through imports and exports, so next year's crop will definitely have an impact,” said Charlotte Kingsman, a New Delhi-based sugar analyst at broker and researcher Kingsman SA. “If the production is very low, imports are likely to happen.”  The global sugar surplus for the 2012-2013 season started October 1 will be 8.5 million tons, 38 per cent bigger than estimated in November, partly because of more supplies from top grower Brazil, the International Sugar Organi-sation said February 21.