Sugar output to reach a new high; Isma may trim estimates

Written by Agencies | Updated: May 12 2011, 06:14am hrs
Sugar output in Maharashtra, the nations biggest producer, will reach a record this year after farmers increased planting to benefit from high prices, a producers group said.

Output may climb to 9.15 million tonne in the year ending September. 30, from 7.1 million tonnes a year earlier, Prakash Naiknavare, managing director of the Maharashtra State Cooperative Sugar Factories Federation , said in a phone interview on Tuesday. Production climbed 27% to 8.76 million tonnes between October. 1 and May 9, he said.

Higher output in India, the biggest producer after Brazil, may add to a global surplus and pressure raw-sugar prices in New York, which have tumbled 39%from a three-decade high in February. Worldwide output may exceed demand by 1 million tonnes this season on higher production in Thailand and India, the International Sugar Organisation said May 5.

The government may allow more sugar exports considering the higher supplies, Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories, said by phone from New Delhi. We have already requested the government for permission to export more.

Sugar futures have plunged 32%this year on speculation supplies from top producers including India and Thailand will expand after farmers increased planting to benefit from high prices. Thailand, the largest exporter after Brazil, may produce another Bumper harvest in the season starting November as plantations expand, according to the nations Office of the Cane & Sugar Board. Indias government on April 19 allowed exports of an additional 5,00,000 tonnes of the sweetener after traders shipped an estimated 1 million tonnes in the six months ended March 31. Thailands exports may reach all-time high of 6.8 million tonnes this year, according to the cane board.

Sugar futures will average 24 cents a pound in 2011, about 15% lower than the average so far this year, before rebounding to 25 cents next year, according to Abah Ofon, an analyst at Standard Chartered Bank

While globally there is a surplus, that surplus is not necessarily going to be exportable, and prices may rebound in the second quarter of 2012 as supplies from Brazil and Thailand begin to dry out and other exporters including India and the European Union hold back sales to rebuild stockpiles, Ofon said.

While on the other handIndian Sugar Mills Association(ISMA) is likely to revise downward the country's total sugar production estimate to around 24.5 million tonnes in 2010-11sugar season because of lower output in Uttar Pradesh than it's earlier projection.

In the beginning of the current season (October-September), the industry body ISMA had projected total sugar output at 25.5 million tonnes. But the forecast was revised downward to 25 million tonnes later.