Sugar Output Estimate in India Increased 5.5% on Monsoon Rains

Sugar production in India, the world’s second-biggest grower, will be 5.5 percent more than estimated in July as the best monsoon rainfall in almost two decades boosts yields, a millers’ group said.

The harvest will total 25 million metric tons in the season starting Oct. 1, compared with 23.7 million tons predicted in July, the Indian Sugar Mills Association said in an e-mailed statement today. That’s more than the 24.5 million tons forecast by the National Federation of Cooperative Sugar Factories Ltd. last week. Output is estimated at 25.1 million tons this year.

A bigger harvest may increase the surplus available for exports from India and add to a global glut. Futures in New York are headed for a third-year of losses, the longest slump since 1992, as the world market is poised for a fourth year of surplus in 2013-2014. Prices have fallen 10 percent this year.

“India must export to save on interest costs on carrying sugar,” Rahil Shaikh, managing director of ED&F Man Commodities India Pvt., said in an interview in New Delhi today. “India has to make more raws to gain export markets,” said Shaikh, who estimates shipments to total between 2 million tons to 3 million tons in 2013-2014.

Stockpiles will surge to 10 million tons by the end of 2013-2014 from 8.7 million tons at the end of this season if the nation fails to export any sugar, according to the mills association. Demand will total 23.5 million tons next year, the group estimates.

The area under cane planting will be 5.29 million hectares this season, 9 percent more than the 4.85 million initial estimate of the Agriculture Ministry, the association said. Increased planting and prospects for higher yields will expand output, it said.

Monsoon rainfall in the three months through August was the highest since 1994, data from the India Meteorological Department showed. Parts of Maharashtra and Karnataka have got above-average rainfall this year after facing drought because in the past two years. The two states together account for 45 percent of the country’s sugar output.

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

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

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