Indian 2008-2009, sugar output is expected to show a record year-on-year fall, exceeding expectations, consultancy Czarnikow said on Thursday. It said India, the world's biggest sugar consumer and second largest producer, would produce 14.7 million tonnes in 2008/09, sharply down from 26.3 million tonnes in 2007/08 and 28.6 million in 2006/07.
"The decline in Indian production during the 2008/09 season has exceeded all expectations and has once again seen India become the critical factor in the global sugar market," Czarnikow said in its latest monthly report. "The volatility of the Indian production cycle is unmatched by other global producers and with another sugar production deficit forecast for 2009/10, the Indian sugar cycle continues its swing from exports to imports."
Czarnikow said the main reason for the sharp decline in Indian sugar output was lower production in the main growing states of Maharashtra and Uttar Pradesh due to a fall in planted area and lower yields. The decline in planted area was a result of government policy to encourage farmers to plant less cane, which was in surplus, and more wheat, which was in deficit, it added.
Czarnikow said the Indian authorities' latest moves to encourage sugar imports, such as lifting the 60-percent white sugar import duty earlier this month, were presently being overshadowed by general elections. "This consequently points towards the risk of a sharper decline in stocks later in the summer, which would encourage Indian buyers to take advantage of the rise in Brazilian supply later in the year," Czarnikow said.
Merchant Sucres et Denrees said in its latest quarterly report on Wednesday that sugar production in India was seen falling to 14.6 million tonnes in 2008/09, from 26.4 million in 2007/08. India is expected to import 3.0 million tonnes of sugar in 2008/09, comprising 2.0 million tonnes of raws and 1.0 million tonnes of whites, Sucden said.
Earlier on Wednesday, Samir Somiya, president of the Indian Sugar Mills Association, said India was likely to produce 14.8 million tonnes of sugar in the year to September 2009. Sucden estimated sugar ending stocks in India would drop to a record low of 4.7 million tonnes in 2008/09, sharply down from 9.6 million tonnes in 2007/08. The report said India would not be able to draw down stocks to the same extent in 2009/10.
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