Sugar exports from India, the world’s second-biggest grower, will exceed 2.5 million metric tons this season for a second consecutive year, according to Czarnikow Group Ltd. in London.
India has authorized exports of 3 million tons for the season that started in October as local supplies are higher than demand. The country may have another 1.5 million tons of sugar available for export, the Indian Sugar Mills Association said on April 3, urging the country’s government to allow additional shipments “immediately.”
“The Indian government has been far more pro-active in authorizing export tonnages than last year,” Czarnikow, which traded sugar in over 90 countries last year, said in an e-mailed statement today. “Previous Indian surpluses coincided with depressed world market values.”
Raw sugar futures traded on ICE Futures U.S. in New York dropped 27 percent last year and are little changed this year. At 23.46 cents a pound, sugar is still above the 20-year average of 11.9 cents a pound, according to data on Bloomberg.
Indian sugar production in the 2011-12 season will be “just short” of 26 million tons, Czarnikow estimated. That represents an increase of 1.5 million tons from last year, according to the company, which said it handles about 10 percent of the 50 million tons of sweetener traded annually.
Higher sugar prices in the world market have enabled India to export this season, it said. In previous years, domestic and global surpluses coincided, limiting India’s ability to ship, according to the report.
Farmers in the India will probably stick to planting cane next season, as returns from wheat and rice were “poor,” it said.
In previous seasons, mills built up debts to farmers, limiting their ability to plant for the new season and resulting in wide swings in production from one year to the next, Czarnikow said. Indian sugar production dropped 44 percent in 2008-09 to about 16 million tons and then rebounded to 20.6 million the next season, U.S. Department of Agriculture data show. This year, cane arrears have been avoided, Czarnikow said.
“The swing cycle is reducing in scale and the widely- expected downturn in Indian production in 2012-13 may not occur,” Peter de Klerk, an analyst at Czarnikow, said in the statement.
To contact the reporter on this story: Isis Almeida in London at Ialmeida3@bloomberg.net
To contact the editor responsible for this story: Claudia Carpenter at Ccarpenter2@bloomberg.net.