(MENAFN- Khaleej Times) Sugar output in India, the biggest producer after Brazil, is set to decline in the year from October as domestic prices fall on cheaper imports and dry weather curbs planting, the Indian Sugar Mills Association said.
Production will probably slide from 24 million metric tonnes in the year ending September 30, M. Srinivaasan, president of the association, said in a phone interview. Decreasing local prices will hamper mills' ability to make timely payments to farmers, encouraging them to switch to other crops, he said. He didn't give a forecast for 2013-2014.
A lower harvest after two years of surplus may spur the world's second-biggest consumer to boost imports further, curbing a slide in New York futures. Sugar slumped 16 per cent in 2012 because of a second year of glut and Goldman Sachs Group Inc. cut its forecast this week to 18.5 cents a pound in three and six months from an earlier estimate of 22 cents, citing rising inventories. Cheaper sugar may extend a decline in food costs tracked by the United Nations. "The domestic sugar situation right now is pretty bad," said Srinivaasan.
Parts of Maharashtra and Karnataka states, which together account for 45 per cent of India's sugar output, have been facing drought in the past 24 months hurting monsoon and winter-sown crops, according to the farm ministry.
Indian refiners, seeking to profit from a slump in global prices, have contracted to import about 919,000 tonnes of raw sugar since October 1, including about 190,000 tons for sale in the local market, said Abinash Verma, director general of the New Delhi-based association.
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