Sugar Harvest in India Seen Beating Estimate to Worsen GlutPratik Parija and Prabhudatta Mishra
Sugar production in India, the world’s second-biggest grower, may be more than estimated as the highest monsoon rainfall in 19 years boosts yields hurt by a drought a year earlier, a growers’ group said.
The harvest will total 24.5 million tons in the 12 months starting Oct. 1, compared with 23 million tons predicted in March, Vinay Kumar, managing director of National Federation Cooperative Sugar Factories Ltd., said in a phone interview. That compares with a crop of 25 million tons this year and more than the 23.5 million needed to meet domestic demand, he said. Output may total 23.7 million tons in 2013-2014, the Indian Sugar Mills Association estimates.
Futures are headed for a third-year of losses, the longest slump since 1992, as the world heads for a fourth year of surplus in 2013-2014. Worldwide supplies will outpace demand by 4.5 million tons in the season that starts in October, following a 10.3 million-ton surplus this season, the International Sugar Organization said Aug. 22. A bigger than estimated crop and five-year high stockpiles may increase exports from India.
“Good rainfall in drought-affected Maharashtra and Karnataka this year has improved prospects for a better production,” Kumar said today. “The country may make more raw sugar if there is demand for exports next year.”
Monsoon rainfall is 6 percent above a 50-year average since June 1, according to India Meteorological Department. The precipitation in the three months ended August 31 was the highest since 1994, data from the agency showed. Parts of Maharashtra and Karnataka, which together account for 45 percent of the country’s sugar output, faced drought because of below-average monsoon rains in the past two years.
Shipments from India may exceed 1 million tons in the year beginning Oct. 1 as a surplus and a weakening rupee spur demand among importers, according to Narendra Murkumbi, managing director of Mumbai-based Shree Renuka Sugars Ltd., the nation’s biggest refiner. Exports from the local crop may total 300,000 tons this season, Kumar estimates.
The rupee is the worst performer among 24 major emerging economies in the past six months on concern that foreign capital outflows will accelerate as the U.S. Federal Reserve prepares to trim stimulus. The currency weakened 14 percent against the dollar this year, reaching a record low of 68.845 on Aug. 28.
Raw sugar for delivery in October was little changed at 17.19 cents a pound on ICE Futures U.S. at 12:13 p.m. in Mumbai today, while white sugar for December delivery climbed 1.1 percent to $490.90 a ton on NYSE Liffe in London yesterday.
Sugar inventories in India may expand 11 percent to about 10 million tons on Oct. 1, 2014, compared with an estimated 9 million tons at the start of 2013-2014 season, Kumar said.
Farmers planted 4.87 million hectares (12 million acres) to sugar cane as of Sept. 6, compared with 5 million hectares a year earlier, according to the Agriculture Ministry. Output may total 24 million tons due to good rains, said Prerana Desai, vice president for research at Kotak Commodity Services Ltd.
“The yield and recovery would be better because of the good monsoon,” Desai said by phone from Mumbai. “This is what has resulted in overall improvement in the production prospects. Earlier it was expected that because of drought in Maharashtra and Karnataka last year, we will have dramatically lower production. But that is not happening, because of improvement in weather.”