New Delhi: India will delay sugar imports until later this year as the agriculture minister says output may hit 17 million tonnes and top producer Brazil will provide enough sweetner from its crop to lower prices further.
The forecast by Union agriculture minister Sharad Pawar on Thursday is higher than industry group, the Indian Sugar Mills Association (ISMA), which last week raised its forecast by 5% to 16.8 million tonnes.
That helped push New York raw sugar futures down on expectations of less imports by the world’s biggest consumer.
Still, analysts said higher output in the current season to September would still be well below local demand of 23 million tonnes, keeping Indian mills on track to import about 3 million tonnes more sugar this year, although domestic prices may drop.
“According to information by states it looks like production will be 16.8 million tonnes. ISMA has agreed to this figure but my personal assessment is that production will cross 17 million tonnes this year,” Sharad Pawar told a conference.
Analysts agreed with the latest government estimate.
“The latest estimate of the government is well within the realm of possibility. But we have to remember that production of 17 million tonnes or more will still be well below consumption,” said Amol Tilak, a senior analyst at Kotak Commodities in Mumbai.
Veeresh Hiremath, a senior analyst with commodity brokerage Karvy Comtrade, said forecast rise by Pawar was too meagre to obviate import needs.
“India still needs to import some more sugar,” Hiremath said.
India, the world’s biggest producer behind Brazil, contracted imports of 5 million tonnes of sugar in 2008-09, after exporting a similar quantity in the previous year.
Strong demand from India helped New York raw sugar futures climb to a 29-year-high of 30.40 cents per pound on 1 February but futures have plunged almost 42% since then.
Last week, international sugar prices hit a seven-month low after Reuters reported that buyers from India had stopped import deals.
But analysts believe the country would have to resume sugar imports by mid-year to build buffer for September when fall festivals start in India that increase sugar demand.
Falling prices prompted ISMA to request the government to re-impose a 60% duty on white sugar imports.
Pawar said there was no immediate plan to tax imports of whites, indicating a cautious approach from the government, which has faced stormy protests over rising food prices.
The minister also said there were no immediate plans to allow wheat exports although the country was running out of space to store more grain.
Most analysts and traders expect the government to consider wheat exports only after the harvest is completed by May.