Sugar Exports by India to Top Predictions on Bumper Harvest, Survey Shows.

Sugar shipments from India, the world’s biggest consumer, may beat predictions as production exceeds usage for the first time in three years, a survey shows.

Exports may be 3 million metric tons in the year from Oct. 1, according to six of 10 producers, traders and brokers interviewed by Bloomberg News. Overseas sales may be 2 million tons, the remaining four said, matching estimates from the Indian Sugar Mills Association and the National Federation of Cooperative Sugar Factories Ltd.

“We’re heading for a bumper crop.” R.L. Tamak, business head for sugar at the Indian subsidiary of Olam International Ltd., said in a phone interview yesterday. “Indications from the fields show that yields are better from a year ago.”

Increased supplies from India, the world’s second-biggest producer, may help cool sugar prices that reached the highest level in almost 30 years in New York yesterday. The commodity climbed 23 percent this year as drought and floods damaged crops in Brazil, Russia and Pakistan, and as investors bought commodities to protect their wealth.

“If the world market is paying these prices, why shouldn’t we benefit,” said M.N. Rao, deputy director general of the mills association. “It’s not the time to create an inventory.”

Raw sugar for March delivery soared as much as 4.5 percent to 33.32 cents a pound in New York yesterday, the highest level for the most active contract since January 1981, and ended at 33.11 cents a pound.

Export Curbs

Production in India may jump to 25.5 million to 26 million tons, seven of the 10 survey respondents said. Output may be 26 million to 28 million tons, according to the remaining three.

Mills produced 18.9 million tons last season, trailing demand of 23 million tons, according to the association. Production was 26.4 million tons in 2007-2008, the last time output exceeded consumption, data from the group show.

The government may consider ending curbs on exports this month, Farm Minister Sharad Pawar said on Oct. 27. Shipments have been regulated after drought damaged crops last season.

“We’ve asked to export 2 million tons to begin with and we will review that once the final figures come,” Vivek Saraogi, managing director of Balrampur Chini Mills Ltd., the second- biggest miller, and president of ISMA, said by phone yesterday.

The National Federation of Cooperative Sugar Factories last week forecast shipments of 2 million tons, less than the 2.5 million tons estimated in September, as demand from bulk users to build reserves may reduce a surplus.

Uttar Pradesh Floods

Exports may total 1.5 million to 2 million tons, New York- based Commodore Research & Consultancy said Nov. 8, less than the 3.5 million tons predicted previously, because of flooding in parts of Uttar Pradesh.

Production in the northern state, the country’s biggest cane-grower, may total as much as 6.6 million tons, up from 5.2 million tons a year earlier, the Uttar Pradesh Sugar Mills Association said Nov. 8. In Maharashtra, India’s top producer, output may climb 34 percent to an all-time high of 9.5 million tons, according to Prakash Naiknavare, managing director of the Maharashtra State Cooperative Sugar Factories Federation Ltd.

“We don’t see any issue with output and supplies,” he said in an interview yesterday. “Exports should start as soon as possible.”

Source : bloomberg.com