ISMA sees sugar farmers, mills standoff resolved soon

By David Brough and Julia Fioretti

LONDON (Reuters) - A standoff between mills and farmers over the cane price will be resolved within a week to 10 days, the head of the country's sugar industry body said on Wednesday.

Abinash Verma, director-general of the Indian Sugar Mills Association (ISMA), said meetings had taken place between cane growers and mills in Uttar Pradesh, a key growing state, paving the way for a resolution of the dispute soon.

Many sugar mills remain idle in India, the world's second largest producer, extending delays to the start of crushing.

New Delhi has held off from announcing any measures to help its ailing sugar industry, such as a hike in import duty on raw sugar, leaving mills' profits squeezed between high domestic cane prices and cheap imports.

Farmers are demanding a hike in the cane price to compensate for a rise in fuel and fertiliser prices while millers want to reduce prices in sync with falling sugar prices.

"I believe that the solution will come in the next week or 10 days," Verma told reporters, speaking on the sidelines of an International Sugar Organization (ISO) conference.

The miller said he expected India to export 2 million tonnes of sugar in 2013/14, of which around 500,000 tonnes had been booked so far, some destined to Al Khaleej refinery in Dubai.

Another senior trade source said privately he believed India had booked some 300,000 tonnes of sugar exports so far this season, since October 1.

Verma said Indian mills were now offering raw sugar exports at discounts, and that they would require raw sugar prices of around 19 cents a lb to make a profit.

"We believe that 19 cents a lb would give mills a small margin," he said.

ICE raw sugar futures traded on Wednesday at 17.37 cents a lb, near eight-week lows, pressured by ample global supplies and weak physical demand.

Verma said that ISMA was lobbying for the import duty to be raised to 40 percent from 15 percent now, to discourage imports to India because domestic sugar stocks were high.

He estimated Indian stocks at around 8.8 million tonnes, and forecast sugar output in 2013/14 at 25 million tonnes, compared with 25.1 million in 2012/13. He estimated annual sugar consumption in India at around 23 million tonnes.

Another trade source said privately he believed that Indian sugar stocks were some 4-6 million tonnes.

(Editing by James Jukwey)