India, the world's biggest sugar consumer, could see output drop nearly 30 percent in the current crop year but is unlikely to raise imports as it has ample stocks, an industry official said on Friday.
"As of now, I am not thinking that India needs to import, not at all," SL Janis, head of Indian Sugar Mills Association, told Reuters on the sidelines of a trade conference in Malaysia.
International traders expect India to import up to five million tonnes of sugar in the next two years to cover the expected crop shortfall between October 2003 and September 2004.
Poor rains in the main sugarcane growing area of Maharashtra in west India, despite a good monsoon in most parts of the country, is expected to cut white sugar output 28 percent to 14.5 million tonnes in 2003/04 from a record 20.1 million tonnes in 2002/03.
India uses at least 18 million tonnes of white sugar a year. But Janis said there was no need to worry about a shortfall as at least eight million tonnes of white sugar stocks were expected to be in the hands of Indian millers and traders by the end of September, which would cover the deficit.
"For the next 2004/05 crop, it would be almost similar like the current crop," he said. Janis said India had bought about half a million tonnes of raw sugar so far this year, mostly from Brazil, to be milled locally.
A 60 percent duty was waived under a government scheme that required millers to keep the raw sugar as stock for two years before refining and selling it.
The purchases were clinched at around $200-$210/tonne C&F, Janis said. Indian white sugar prices are currently around 1,500 rupees per 100 kg, or 15,000 rupees a tonne ($331 a tonne), making economic sense for millers to import raw sugar and market the milled product two years later.
Janis said Indian sugar prices were still strong around 400 rupees higher than in May 2003.
But the lower output will hit exports, which are seen at only around 30,000 tonnes in 2003/04, compared to 400,000 tonnes in 2002/03 and over one million tonnes in 2001/02, he said.
In recent years, India has only been a sporadic sugar exporter, mainly replacing Thai suppliers in the Asian region to countries such as Indonesia, Bangladesh and Sri Lanka.