New Delhi: A recent revival of monsoon rains will help India’s cane crop but the world’s top sugar consumer will still need to import in the new season from October, the head of a trade body said.
“Recent rains will certainly have positive impact on the plantation for 2010-11 harvest and is likely to have positive impact on 2009-10 cane yield,” Samir Somaiya, president of the Indian Sugar Mills Association (ISMA), told Reuters in an interview.
India’s cane harvest contracted last year because farmers switched to competing crops such as wheat and rice, for which the government paid lucrative rates directly to farmers.
This year, the worst monsoon in nearly four decades, particularly in the top cane-growing state of Uttar Pradesh, has hit the crop, raising import prospects and pushing benchmark New York raw sugar futures to the highest in almost 30 years.
“With 4 million tonnes of imports, carryover stocks of imported sugar will be 3 million tonnes as about a million tonnes will be processed before the season ends next month,” Somaiya said.
A Reuters poll on 5 August, showed India would import 4.5 million tonnes in the new season.
Sterling Smith, an analyst for brokers Country Hedging Inc in Minnesota, US, said many in the trade were assessing whether a weak monsoon had inflicted more damage than Indians were willing to admit in their effort to keep a lid on global prices.
Somaiya said rising prices had not helped Indian mills because they had hardly any stock of sugar, but the sugar trade abroad had gained from India’s scarcity, making it important for the country to become self-sufficient in the commodity.
“There has been a regular increase in our sugar consumption but there is a volatility in sugar production and sugar cane planting. So, let us get sugar production and cane planting to a level where we can meet our own demand,” he said.
He said consumption in India had increased steadily irrespective of prices.
“Consumption keeps rising. Even when sugar prices had crashed, consumption did not fall,” he said.
Traders say mills in India have produced about 14.8 million tonnes of sugar in 2008-09, 44% lower than a year ago.
Somaiya said ISMA members would meet soon to assess the cane crop and next year’s production.
J B Patel, president of the National Federation of Cooperative Sugar Factories Ltd. on Tuesday said a weak monsoon would cut the cane crop, and output might not rise beyond 16 million tonnes in 2009-10.
Kushagra Nayan Bajaj, joint managing director of India’s top sugar producer Bajaj Hindusthan Ltd told Reuters in a recent interview that next year’s consumption would rise 4.3% to 24 million tonnes.