New Delhi: India could produce 24.7 million to 25.0 million tonnes of sugar in the new season that began this month, minister of state for agriculture K.V. Thomas said on Monday, a figure agreed with the agriculture ministry which had previously forecast 26 million tonnes.
The agreement between the farm and food ministries over the 2011-12 output paves the way for the first tranche of sugar exports in the new season.
The latest forecast is above an annual demand of 22 million to 23 million tonnes and is slightly above Thomas’ estimate in September of 24.6 million tonnes.
Two top producers’ bodies believe the 2011-12 output could be as high as 26 million tonnes, leaving 4 million tonnes of exportable surplus.
A ministerial panel on par with the cabinet will consider allowing further exports of sugar for 2011-12 at its next meeting, as the domestic supply situation looks good, Thomas added but did not give a date.
“We stick to our initial production estimate of 24.7 million tonnes but output could exceed a little, up to 25 million tonnes,” he told reporters after a meeting with union minister for agriculture Sharad Pawar.
India, the world’s biggest consumer and second-biggest producer of the sweetener after Brazil, allowed 1.5 million tonnes of exports under open general licence (OGL) in three tranches in the year to 30 September, 2011.
“We will take the proposal for allowing sugar exports soon to the next eGoM (empowered group of ministers),” said Thomas.
Earlier this month Thomas said the government would decide in early November how much sugar it could export.
The government avoids permitting exports before Diwali, the festival of lights which was celebrated on 26 October, to stave off any spike in local prices as sales of sweets and confectionaries surge because of the festivities.
Sugar prices in Kolhapur, a key market in the top producing state, western Maharashtra, have gone up by 3% to Rs 2,734 ($56.25) per 100 kg in the past three months.
By 2:30 pm, the key November sugar contract on the National Commodity and Derivatives Exchange (NCDEX) was 0.58 percent higher at Rs 2,757 per 100 kg.
But stocks are higher.
On 1 September sugar stocks were at 8.83 million tonnes against 6.4 million tonnes in the previous year and equivalent to some four months of domestic demand.
“There is ample sugar in the country. The new season crushing will add to existing stocks,” said Vilasrao Deshmukh, science minister who hails from Maharashtra, after meeting the food minister.
He said Maharashtra can export 2.5 million tonnes in 2011-12.
The government may allow sugar exports on a monthly basis, Pawar said on 19 October.
Traders said global sugar prices may fall further with the arrival of the new season sugar in India and Thailand, the world’s second-biggest sugar exporter.
Benchmark sugar prices have fallen 7.3% in the past one month. On Friday, New York’s March raw sugar contract closed down 2.6% at 26.15 cents a lb, pressured by concerns that an agreement by euro zone leaders may be insufficient to fix the region’s debt crisis.
Thomas also said the current stock holding limit for sugar would be removed after November.
Currently, a sugar trader can hold stocks up to 500 tonnes until 30 November.