Business | Economy
Sugar output poised to rise 17% to meet demand
Rain in production areas has been good and country is expected to produce 25.5m tonnes of sweetener from October, minister says
- Bloomberg
- Published: 00:00 September 6, 2010
New Delh: Sugar production in India, the biggest consumer, may jump 17 per cent as rains improve yields, helping the nation meet domestic demand, Agriculture Minister Sharad Pawar said.
Production may rise to 22 million metric tonnes, Pawar said in an interview in New York on Sunday. India's monsoon rainfall, the main source of irrigation for the nation's 235 million farmers, was one per cent below normal from June 1 to August 30, the Indian Meteorological Department said.
India has been a net buyer since 2008 after a drought ravaged crops, pushing prices in New York to a 29-year high of 30.4 cents in February. Increased production from the Asian country may weigh on prices that have slumped 24 per cent this year on bets that rising supplies may erase a global deficit.
"Our observation is that the quantity of rainfall in sugarcane areas has been extremely good," Pawar said. "I don't think we will be in a situation where we will need to import this year." The country's production "may exceed" annual demand of about 23 million tonnes, he said in May.
India may produce 25.5 million tonnes of the sweetener in the year beginning October 1, from 18.8 million tonnes estimated this year, according to the Indian Sugar Mills Association.
The nation may have as much as 2.5 million metric tonnes of surplus for exports, Jayantilal Patel, president of the National Cooperative Sugar Factories Ltd, said on September 1.
Farmers planted cane on 4.77 million hectares (11.8 million acres) as of August 26, up 14 per cent from a year ago, according to the agriculture ministry. Above-average rain in the growing areas in central and southern regions will result in "strong yields," Australia & New Zealand Banking Group Ltd said in an e-mailed report on September 2. It forecast output at 25 million tonnes.
The sugar market may have a smaller surplus than earlier forecast because of crop damage in nations including Russia and Pakistan, and dry weather in Brazil, the top producer, broker Kingsman SA, said on September 1.
Next year, production will rise 9 per cent to a record 172.5 million tonnes, creating a 2.5 million-tonne surplus, according to the International Sugar Organisation's estimates.
India may decide on a plan to end controls on sugar producers after assessing the size of next season's crop, Pawar said.
India's government decides the floor price for cane, the quantity of sugar to be sold in the market every month and buys 20 per cent of output at below-market prices from mills to sell to the poor.
Pawar in July said the time is right for the government to end controls on sugar mills as output is set to rebound. "We have not reached any decision as yet," he said.
The minister on September 2 briefed Prime Minister Manmohan Singh about the plan to end controls on sugar producers, the Press Trust of India reported that day, citing people it didn't identify.
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