India 2009-10 Sugar Output May Rise 25% To 20M Tons

MUMBAI -- (Adds more quotes, details on consumption and imports, background)

India's sugar production in the crop year starting October 2009 is likely to recover and touch 20 million metric tons on an increase in area under cultivation prompted by higher prices, a senior industry official said Tuesday.
"The area is likely to rise 20%-25% as farmers are getting better prices," Vinay Kumar, managing director of National Federation of Cooperative Sugar Factories Ltd., told Dow Jones Newswires.

Last year, mills delayed payments to sugarcane farmers as prices slumped due to higher production, but this year they are paying on time as prices are holding firm, he said.

Local sugar prices have risen to a range of INR21,000 to INR22,000/ton from INR15,000 to INR16,000/ton a year ago due to the production shortfall.

In 2008-09, sugarcane area fell to about 4.4 million hectares from 5.3 million hectares the previous crop year, according to the latest government estimates.
India's sugar production in 2008-09 is expected to be around 16 million tons, down from the previous year's output of 26.3 million tons.

The country produced about 12.7 million tons in the October-February period of the current crop year, down 25% from 17 million tons in the same period last year.
Kumar said that due to the lower production, "We will have 2 million-3 million tons of carryover stocks in 2009-10 as compared to 7 million-8 million tons this year."
The country's annual consumption is 22 million to 23 million tons, and it is likely to import about 1.5 million tons of raw sugar in 2008-09.

India is the world's biggest sugar consumer and the second-largest producer.
Kumar said consumption is rising by a million tons every year, and the government should extend the period for duty-free imports of raw sugar beyond Sept. 30 to help cover the domestic shortfall.

Last month, the government eased restrictions on the sale in the local market of sugar refined from duty-free imported raw sugar.
Previously, millers had to pay an import duty of 60% if they wanted to process and sell the sugar in the local market without an obligation to export white sugar.

source: (Dow Jones Commodities News via Comtex)