Mills have contracted more than two-thirds of their raw sugar import requirements for the ensuing 2009-10 season (October-September), according to Mr Narendra Murkumbi, Managing Director of Shree Renuka Sugars Ltd.
During the current 2008-09 season, the country is expected to import around 2.4 million tonnes (mt) of raw sugar.
Of this, one mt would be refined within the season, with the balance 1.4 mt being available for the new season. In addition, mills have already contracted imports of 2.6 mt.
Refining capacity
“So, in all, we have 4 mt of raws that have either arrived or contracted. Given that our mills would be in a position to refine up to 6 mt of raws in 2009-10, it leaves an un-bought quantity of only 2 mt”, Mr Murkumbi told the Indian Sugar Summit, organised by the Switzerland-based consultancy Kingsman SA, here on Tuesday.
According to Mr Murkumbi, the 6 mt refining capacity would include 1.4 mt of his own group, besides 1.5 mt in the South, 0.7 mt in Maharashtra, 0.4 mt of the EID Parry-Cargill joint venture and 2 mt in Uttar Pradesh.
Among the UP mills said to have contracted large volumes of raws for processing in the new season are Bajaj Hindusthan (0.7 mt), Dhampur Sugar (0.45 mt), Simbhaoli Sugars (0.25 mt), Triveni Engineering (0.20 mt), Balrampur Chini (0.1 mt) and Dalmia Sugar (0.1 mt).
Global prices
Mr Murkumbi’s statement that the country would need to import only another 2 mt of raws for the new season comes even as global sugar prices continue to skyrocket in anticipation of supply shortfalls in India along with reports of Brazil trimming its output estimates.
Raw sugar prices at New York have more than doubled this year, with the October delivery contract closing at 24.29 cents a pound on Monday, with March futures ruling even higher at 25.82 cents.
Domestic production
A section of the Indian industry believes that with domestic production of 16-17 mt and already contracted imports of 4 mt for 2009-10, there are enough stocks to last through next July.
And with farmers inclined to plant more in view of remunerative price signals, the country’s imports may not turn out as large as previously expected.
Meanwhile, Mr Eduardo Leao de Sousa, Executive Director of Brazil’s UNICA (Sugarcane Industry Association), said that his country’s sugar output for 2009-10 (March-February) may fall short of earlier estimates.
Brazil’s Central-South region (which accounts for over 90 per cent of the country’s sugar) was originally expected to crush 550 mt of cane, leading to production of 31.20 mt of raw sugar and 26.28 billion litres of ethanol.
“These estimates were made in March. But following that, we had very heavy rains, which is likely to impact sucrose content in the cane and translate into lower production. We will release updated estimates in the next two weeks”, Mr Sousa told Business Line.
Dr Plinio Mario Nastari, President of Datagro, a Sau Paulo-based research firm, was emphatic in stating that “production will not cross 30.5 mt”.
In 2008-09, Brazil’s Central-South region crushed 504.95 mt of cane and produced 26.75 mt of raw sugar and 25.102 billion litres of ethanol.
“This year, 23 new mills started operating, which helped crush almost 45 mt of additional cane. I don’t think production can be ramped up to the same extent for the 2010-11 season, more so because much of the new crushing capacities created are exclusively for ethanol manufacture and these cannot be overnight switched for sugar”, Mr Sousa said.
According to Dr Nastari, sugar production in 2010-11, will “at the maximum touch 32.10 million tonnes”.
Source : Business Line