Cairns, Australia: India could produce 20 million tonnes of raw sugar in 2009-10, up from an estimated 14.7 million tonnes in 2008-09, reducing the need for imports in the world’s largest consumer, the head of a top Indian trade body said on Monday.
India, also the world’s second-largest producer, may consume 21 million to 21.5 million tonnes during the year to September 2010, although high sugar prices could see consumers cut back consumption, according to Shanti Lal Jain, director general of the Indian Sugar Mills Association, which groups private sugar producers
“India is not a country that can keep buying sugar and sweetmeats if the prices go up and up,” Jain said on the sidelines of an industry conference. “Already there has been some belt tightening.”
Jain had earlier estimated India’s sugar output at 19 to 20 million tonnes in 2009-10 and pegged production in the current year at 18 million tonnes.
Raw sugar imports by India have pushed up New York futures more than 30% this year, with the spot month contract striking a near three-year peak of 16.05 cents per pound last week before trimming gains.
India has allowed imports of raw and white sugar at zero import duty to keep a lid on domestic prices, while farmers have planted more acreage with cane this year following an improvement in prices.
Jain said domestic raw sugar prices had risen to Rs23 ($0.49) to Rs24 per kilogram from Rs19 to 20 a year ago.
“Prices are too high. I don’t see them going up in an unlimited way,” he said.
India this year changed from being a net sugar exporter to a net importer after its raw sugar production fell 45% as farmers switched to higher return crops such as wheat and reduced fertiliser use because of high costs.
Jain said India might import 2 million to 2.5 million tonnes of raw sugar in 2008/09 as consumers were already reacting to high prices, resulting in a 20-25% contraction in confectionary demand.
India might import a small amount of sugar in 2009-10, but it would only be for essential needs, he said.
India on 17 February permitted sugar makers to import tax-free raws and relaxed rules further in April by permitting 3 state-run trading firms to import up to 1 million tonnes of duty-free whites.
India’s sugar stocks will jump to nearly 5 million tonnes at the start of the new season on 1 October, more than double previous estimates, after mills sealed deals to import 2.5 million tonnes of raws, Jain said on 22 May.
ICE July raw sugar futures ended 0.06 cent weaker at 15.58 cents per lb on Friday as it consolidated from Tuesday’s near three-year high above 16.00 cents in the July contract.