Sugar Output in India to Climb on ‘Heavy Planting’, Group Says

Sugar output in India, the world’s second-biggest producer, may climb next year as farmers expand crop area to benefit from high prices, a millers’ group said.

Production in the season from Oct. 1 will climb at least 5 percent from an estimated 25 million metric tons this year, Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd., said in an interview in Dubai yesterday, where he’s attending an industry conference.

A bigger harvest in the Asian nation may help fill a global deficit that sent raw-sugar prices in New York to a 30-year high this month. The country may this week revive a plan to permit exports of 500,000 tons as it swings into surplus for the first time in three years, broker and researcher Jonathan Kingsman and an Indian producers’ group, said at the conference yesterday.

“When prospects are good for the next crop as well, there should be no hesitation in allowing exports,” said Kumar, whose group accounts for almost half of the country’s output. “India should first allow 500,000 tons and then look at permitting at least 1 million ton more.”

Sugar soared to 36.08 cents per pound in New York on Feb. 2, the highest level since 1980, after adverse weather hurt crops in Australia and Russia. May-delivery futures lost 1.5 percent to close at 28.42 cents on Feb. 18. Prices have still doubled since the end of May.

Surplus

India may produce 24.5 million tons this season, more than the demand of 23 million tons, according to the government. The Indian Sugar Mills Association and the National Federation have forecast 25 million tons. The country may have a surplus of 6.7 million tons at the end of September, of which 5 million tons will be carried over to the new season, Abinash Verma, director general of the association, said yesterday. That will leave 1.7 million tons for sales overseas, he said.

Planting will be completed in Maharashtra by end of March, Kumar said. Farmers are getting paid promptly for cane and that may encourage them to increase the area, he said. The western Indian state is the country’s biggest sugar producer.

“There has been heavy planting in Maharashtra and other states,” Kumar said. “There was a fear that sugar cane will lose out to cotton because of high prices. So far, there are no signs of that happening.”

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net

To contact the editor responsible for this story: Ravil Shirodkar at rshirodkar@bloomberg.net

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