India Sugar Output May Jump 38% on Planting, Rainfall

Sugar production in India, the world’s second-biggest grower, may surge by at least 38 percent after higher prices boosted planting and as rains improve yields, according to a survey by Bloomberg News.

Output may soar to 26 million metric tons in the season starting Oct. 1, eight of 10 producers, traders and consumers said yesterday. Production may reach a record 29 million tons, according to the remaining two. India may produce 25.5 million tons in 2010-2011, from 18.8 million tons estimated this year, according to the Indian Sugar Mills Association.

“The higher output estimate is mainly due to a rise in crop area, good rains and increased productivity,” said Vinay Kumar, managing director of National Cooperative Sugar Factories Ltd., which accounts for half the nation’s production. “There will be a surplus next year.”

Higher-than-expected production in the world’s top sugar- consuming nation may lower raw sugar prices in New York, which have surged 56 percent since reaching a 13-month low on May 7 on concern that weather will damage crops in Brazil, Russia, China and Pakistan. India may ship at least 2.5 million tons in 2010- 2011, the National Cooperative said yesterday.

Farmers planted cane on 4.77 million hectares (11.6 million acres) as of Aug. 26, up 14 percent from a year ago, according to the farm ministry. Above average rain in the growing areas in central and southern regions will result in “strong yields,” Australia & New Zealand Banking Group Ltd. said today in an e- mailed report. It forecast output at 25 million tons.

“The acreage is expected to increase 20 percent compared with last year,” said Kumar, who participated in the survey.

Pakistan

Mills have “committed” to ship 320,000 tons of the white variety, Yatin Wadhwana, managing director of Sucden India Pvt., told reporters in New Delhi today. The sugar will go mostly to Pakistan, if the government approves the sales, he said.

Sucden expects output to be 25 million tons to 26 million tons, based on a survey it conducted at the two-day conference in New Delhi, Wadhwana said. The range was 22 million tons to 23 million tons a month ago, he said. The country may ship as much as 2 million tons in the 2010-2011 season, he said.

The sugar market may have a smaller surplus than earlier forecast because of crop damage in nations including Russia and Pakistan, and dry weather in Brazil, the top producer, broker Kingsman SA said yesterday.

Global production may top demand by 3.52 million tons in the year to March, compared with 5.17 million tons predicted in June, Kingsman said. Output may be 167.72 million tons, less than a previous estimate of 170.17 million tons, the firm said.

Brazilian Harvest

The cane harvest in Brazil’s Center South may be less than the 570 million tons forecast last week if dry weather continues, Marcos Jank, the president of industry group Unica, said in an interview on Aug. 31.

Futures for October delivery fell as much as 0.9 percent to 20.31 cents a pound in after-hours trading on ICE Futures U.S. and traded at 20.36 cents at 5:30 p.m. Mumbai time. The price reached 20.54 cents yesterday, the highest level since March 9.

Prices more than doubled last year as crop damage in Brazil and India, the top producers, crimped supplies. Raw sugar rose to a 29-year high of 30.4 cents in February, before tumbling on speculation that farmers would increase plantings.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net

To contact the editors responsible for this story: James Poole at jpoole4@bloomberg.net

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