Indian ministers could allow a further one million tonnes of sugar exports when they meet on March 26, a government source and traders said, just ahead of top producer Brazil's entry into the market next month when global prices could tumble.
India, the world's top consumer and the second-biggest producer, has allowed two million tonnes of sugar exports so far in the season that began on October 1. "Keeping in mind this year's production, consumption, carryover stocks from last year and the trade dynamics abroad, there is a strong possibility of one million tonnes," the government source said.
The Indian Sugar Mills Association (ISMA), a producers' body, expects output at 26 million tonnes in 2011/12, up 6.5 percent year-on-year. The government estimates output at 25.1-25.2 million tonnes. At the start of the season on October 1, mills had 6.8 million tonnes of carryover stocks from the previous season, up from 5.0 million tonnes a year earlier, according to the ISMA.
Indians, famed for having a sweet tooth, consume around 22 million tonnes of sugar annually, leading to a surplus. "One million tonnes of Indian sugar has to be in the global market before Brazil enters and prices fall," said the government source.
On Tuesday, benchmark New York prices had surged to a three-week high of 26.20 cents a lb after market talk of some scale-back in output from Brazil's centre-south region. But consultant Jonathan Kingsman said funds might have over-reacted to the talk of lower-than-expected Brazilian output and prices could fall.
Thailand, the world's second-biggest exporter, is likely to produce a record 10 million tonnes of sugar in the 2011/12 season because of good weather conditions. It is already exporting for this season. Brazil and Thailand together export around 32 million tonnes. Major buyers are the Middle East, Africa and especially for India, Asian neighbours such as Sri Lanka.
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