Excess rains in India May hit sugar production

Production may not meet its target this year but that is not leaving the sugar industry worried as even a slightly lower achievement would be much better than last year's

Sugar production in India may not touch the target of 25.5 million tonnes this marketing year due to excess rain in Uttar Pradesh that has affected the cane yield in the state.

Production may not meet its target this year but that is not leaving the sugar industry worried as even a slightly lower achievement would be much better than last year’s, analysts observed.

“Rain impacted badly on cane crops in Uttar Pradesh and consequently production target for the state this year has been reduced to 6.66 million tonnes from the earlier estimate of 7.09 million tonnes,” said an Indian Sugar Mills Association (ISMA) official, who did not wish to be identified.

According to Vivek Saragoi, managing director of Balrampur Chini Mills Ltd, sugar production in Uttar Pradesh, India’s second largest sugar producing state, would suffer as rains have devastated the cane crop. On Wednesday the International Sugar Organisation (ISO) lowered its 2010-11 world production estimate and said the surplus sugar stocks would be 1.29 million tonnes, less than half its previous production.

The world body hopes for a record sugar production of 169 million tonnes this year, but inclement weather in key sugar producing countries has prompted the global body to slash its output estimate for August by 1.4 million tonnes.

The ISO has also lowered the initial production forecasts for China, the European Union (EU), Russia, Ukraine and Colombia, apart from the largest sugar producing nations. India is world’s second largest producer of sugar after Brazil.

Flash floods in Pakistan in July and August had wiped out large tracts of maturing crops, leading to a spurt in sugar prices in the international markets.

“Commodities prices have moved northward in the recent past on firm demand and lower supply,” said Ravindra V Rao, assistant vice president (commodities advisory) at Unicon Commodities. Sugar prices recently crossed a 30-year high in international market and are seen remaining high and extremely volatile. “Outside Asia, crop expectations for Egypt, the EU and the US were also curtailed,” said the Food and Agriculture Organisation.

However, according to ISMA forecasts India is likely to produce 25 million tonnes of the sweetener in 2010-11. The country’s sugar production in the last marketing year (October to September) was 18.8 million tonnes.

“Bad weather and other factors could lead to a shortfall in sugar production but it will not be worrisome,” said Mehul Agrawal, research analyst (commodities) at Sharekhan, an online trading portal. India is expected to decide on easing curbs on sugar exports after the actual production figures are available, Agriculture Minister Sharad Pawar had told Parliament recently.

source: tehelka