India will surpass Brazil this year as the world’s top sugar producer, the International Sugar Organization (ISO) has said, and added that increased exports may pressure prices of white sugar, which have fallen by one-third in the past year on rising output in the world’s leading producers.
The global sugar market is headed for a surplus of 10.8 million tonnes (mt), according to London-based ISO.
“Export inquiries are dull at the moment and we expect demand to pick up from November,” Prakash Naiknaware, managing director of Maharashtra State Co-Operative Sugar Factories Federation Ltd, said in an interview from Pune.
“Global sugar prices seem to have stabilized for the moment, though no major improvement is seen in the near term,” he added.
Sugar mills in Maharashtra, the country’s biggest cane-grower, may more than double exports this year as prices decline amid a record harvest. Mills may export as much as 2.4mt of sugar in the year to September, including 900,000 tonnes in the raw form. The state may produce 9.7mt this year, 7% more from last year, Naiknaware said.
White, or refined, sugar for December delivery fell $2.20 (Rs86.46), or 0.8%, to $270.2 a tonne as of 10:48am in London. It has fallen 21% this year.
Producers have agreed to sell 300,000 tonnes of raw sugar to the Indian Sugar Exim Corp. Ltd, a producer-funded company that has won contracts to ship 550,000 tonnes of the commodity between December and March. Mills may ship as much as 1.5mt of refined sugar this year, compared with 1.1mt last year.
Some sugar mills in Maharashtra have begun crushing cane from the new crop and output may peak in November, Naiknaware said.
Mills expect a sugar recovery of 11.4% from every tonne of sugar cane crushed, he added.
Sugar output in the country may reach a record 29mt in the year to 30 September 2008, exceeding local demand of about 19mt, agriculture minister Sharad Pawar had said on 3 October.
India had reserves of 11.9mt on 30 September, enough to meet demand for more than seven months. Bloomberg