India. Sugar Semi-annual. Oct 2013 Nov. 15, 2013
Post forecasts Indian sugarcane planted area of 5.1 million hectares and production of 340 million metric tons (MMT) of sugarcane in marketing year (MY) 2013/14 (Oct-Sep), both down from the previous forecast. Consequently, centrifugal sugar production for MY 2013/14 will be marginally up at 25.4 MMT (raw value). India is likely to export upwards of 2.0 MMT of sugar in MY2013/14, roughly one-third of which will be raw sugar. Post also expects that sugar imports into India will be minimal.
India’s sugarcane production in MY 2013/14 should be upwards of 340 MMT and area planted for Indian sugarcane is expected to be 5.1 million hectares. These predictions reflect revisions over Post’s April 2013 estimates and take into account updated Government of India (GOI) data and conditions on the ground following the 2013 monsoon. The revisions continue to show increased levels of sugarcane production and area planted over MY 2012/13.
Despite the projected decline in overall sugarcane yields, sugar production in MY 2013/14 is estimated to increase slightly to 25.4 MMT. This marginal increase is due to higher than expected sugar production levels from India’s western and southern states, as these areas particularly benefitted from timely and evenly distributed monsoon rains. Favorable monsoon conditions will improve India’s overall sugarcane recovery. However, sugarcane yields in scattered production areas were moderate, as fields in these areas were planted late and/or received excessive levels of precipitation.
MY 2012/13 production and planted area data are also revised downward to 339 MMT and 5.06 million hectares, respectively. These revisions are based on the GOI’s fourth advance estimate for crop year 2012/13. Sugar production estimates are subsequently revised accordingly.
Post revises its 2012/13 and 2013/14 consumption estimates upwards to 25.2 MMT and 26.2 MMT, respectively. These revisions more accurately reflect the most recent industry estimates and consumption trends.
Because of India’s large sugar inventory and demand in Asian and African markets, India is likely to export upwards of 2.0 MMT of sugar in MY2013/14, provided Indian sugar prices become more competitive vis-à-vis the international market. Approximately one-third of potential exported stocks will be raw sugar. Although international sugar prices are low, Indian millers are highly incentivized to export as much as possible, as to liquidate excess inventory and to help mitigate financial losses. However, because domestic sugar prices are currently higher over international prices, Indian millers are not as competitive on the export market. Indian input costs associated with sugar production are currently higher than domestic prices. Post expects that MY 2013/14 sugar imports into India will be negligible.
Imports On July 8, 2013, the GOI raised the import duties for raw and refined sugar from 10 percent to 15 percent in an effort to protect domestic sugar prices and to help millers clear their debts to farmers. The relevant notification is available at the: Customs Notification No. 34/2013. More recently, the local sugar industry association requested additional, increased duties on sugar as to prevent additional inventory on the back of existing high domestics stocks.
Exports Currently, sugar exports are under the Open General License (OGL), subject to prior registration with the Directorate General of Foreign Trade.
MY2013/14 and MY2012/13 end stocks for sugar end stocks for have been revised down to 7.5 million tons and 10 million tons, respectively. The stocks are more than sufficient to meet the normal stock requirements (3 months consumption).
Throughout calendar year (CY) 2013, Indian sugar prices declined due to higher than expected sugarcane yields and large international sugar stocks. Current Indian sugar prices range from $507-$540 per MT in the major domestic wholesale market. Post expects that out-year sugar prices in MY 2013/14 will remain low due to increased domestic stocks, although international market prices may cause some degree of fluctuation within local markets. Since May 2013, gur prices have been stable. Gur, also known as jaggery, is a form of raw, uncentrifuged sugar that is widely produced as a cottage industry by small scale Indian processors. Gur prices in MY2013/14 will be guided by the sugar price fluctuations