India sugar output up so far, more exports likely

NEW DELHI: India's sugar output rose 22.2 percent in the first two months of the new season from October despite crushing delays in its top producing state, a leading industry body said on Monday, boosting the chances of more sugar exports by the government.

Last month, the world's top consumer of sugar, and the biggest producer after Brazil, allowed mills to export 1 million tonnes, kicking off the overseas sales of the sweetener in the 2011/12 season.

Even though stocks are plentiful and forecasts for production remain strong, the government is expected to allow a second tranche of exports only after getting a clearer picture about total output once cane crushing gathers pace this month.

Food inflation, which has been stubbornly high over the past year, softened to about 8 percent in the week ending Nov. 19, the lowest in nearly four months.

"The trend that has emerged in the first two months of the season is an indication of a bumper production and this is going to help the government take an early decision on the next tranche of exports," Prasoon Mathur, a senior analyst with Delhi-based Religare Commodities.

Sugar mills have produced 2.2 million tonnes of sugar between Oct.1 and Nov. 30, up from 1.8 million tonnes in the year ago period, the Indian Sugar Mills Association, a producers' body, said in a statement.

Between October and November, output in Uttar Pradesh, the biggest cane producing state, was at 530,000 tonnes against 183,000 tonnes in the same year-ago period, the statement said.

But output in the biggest sugar producing state of Maharashtra, where crushing was delayed due to a price row between cane growers and millers, was 880,000 tonnes, down from 936,000 million tonnes a year earlier.

Expectations of higher supply from India and Thailand has put pressure on global sugar prices, dealers said.. Industry expert Jonathan Kingsman also expects a sugar surplus of up to 8 million tonnes in the next 12 months.

Trade and government officials believe India's sugar mills will produce 25 to 26 million tonnes of sugar in the current sugar year that began on Oct. 1. Domestic demand hovers around 22 million tonnes.