11th August 2004, 09:51 AM
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Join Date: Mar 2004
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Indian sugar output seen falling in 04/05 - analysts
Indian sugar output seen falling in 04/05 - analysts
Quote:
NEW DELHI/LONDON (Reuters) - Sugar output in the world's largest sugar consuming nation India could shrink by about a million tonnes in the year from October, analysts said.
But they were divided over whether the lower output would lead to a surge in imports in 2004/05.
"We estimate sugar output in 2004/05 at about 12.5 million tonnes, almost a million tonnes lower than the current year," Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories, told Reuters on Tuesday.
"But there is no panic situation as we would have stocks of about 7.5 million tonnes on October 1 and it will be enough to tide over 2004/05," he said.
A European analyst, who asked not to be identified, also said he expected a drop in 2004/05 Indian sugar output of about a million tonnes, but he said that if his numbers were right, India would have to import big volumes of sugar in 2004/05.
The food ministry said in July the country's sugar output in the current year to September was expected to fall by 31 percent to 13.8 million tonnes from 20.1 million tonnes a year ago.
Paris-based broker Jonathan Kingsman said in his second forecast for crop year 2004/05 that the global sugar deficit could reach 6.39 million metric tonnes, up from his previous estimate in April of 3.4 million tonnes.
Kingsman's report, released on Friday, attributed much of the increase to India's poor crop forecast for 2004/05.
India's 2003/04 (April/March) harvest was savaged by drought in southern states such as Maharashtra, and it appears there will be little bounce back in 2004/05, Kingsman said, forecasting India's next crop at 14.9 million tonnes raw value, unchanged from the previous year.
IMPORT DUTY
Analysts said Indian domestic sugar prices had firmed and the government might lower the white sugar import duty.
"I will not be surprised if the government reviews the high 60 percent customs duty on white sugar," said a Bombay-based commodities analyst. "That possibility is very real."
India annually consumes about 18 million tonnes of sugar.
Toby Cohen, director of research of Czarnikow Sugar, a major London-based merchant, said he expected India to have a lower crop in 2004/05 due to the after-effects of dry weather from the 2003/04 crop and expectations of a lower planted area.
He said India could boost imports in 2004/05, but said that for the moment, the government seems comfortable with the stock position and does not want to encourage imports unless it believes that these are absolutely necessary.
"India has been burdened by high stocks for some time, and I think that the government would like to ensure that these will be reduced before encouraging an import programme," he said.
India's farm ministry said area coverage under sugarcane so far this year is about 3.72 million hectares, against 4.63 million in the corresponding period last year.
S.L. Jain, secretary general of the Indian Sugar Mills Association, said the condition of the crop had improved after good rains in Maharashtra, Uttar Pradesh and Tamil Nadu.
"It is better than what was earlier feared and output should be around 12-13 million tonnes," Jain said.
He said the country had contracted for imports of about 850,000 tonnes of raw sugar against advance licensing in the current year and estimated the raw sugar imports in 2004/05 at about 1.5 to 2.0 million tonnes.
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