London, 10 September India is expected to overtake Brazil as the world’s top sugar producer in 2007/08 and a lack of storage may force it to sell at lower prices later this year, the International Sugar Organization said today.
The London-based ISO forecast in a monthly report Indian sugar output in 2007/08 (October/September) at an all-time high of 33.15 million tonnes, up 8% year-on-year.
The ISO noted that India’s sugar industry has set a target not to sell raw sugar for less than 10 cents a lb.
“It remains to be seen, however, whether this target can be achieved in the second half of 2007, when storage capacities seem to be turning into a serious issue,” the ISO said.
“During the peak production months from November to April...large-scale exports, regardless of the level of world market prices, may become the only viable option.”
Last month, the ISO projected Brazilian sugar production in 2007/08 (October/September) at 32.38 million tonnes, up less than 3% year-on-year.
White sugar futures prices in London fell to a 26-month low for the front month of $269.10 a tonne on 31 August, weighed down by a massive global supply surplus.
“One of the main reasons behind the depressed state of the world market is the sugar glut in India,” the ISO said.
India, the world’s top sugar consumer, has exported 1.5 million tonnes of white sugar since January 2007, when a ban on overseas sales ended, the ISO said, quoting industry reports.
“This indicates that logistical infrastructure bottlenecks are not as tight as previously expected in some quarters and the industry may ship significantly more than 3 million tonnes of sugar a year,” the ISO said.
To get rid of the sugar surplus India has cast an eye on the raw sugar market and, according to the press, the industry has managed to sell around 550,000 tonnes of raws to refineries in the Middle East, the ISO said. REUTERS