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India Sugarcane Expected to Continue Strong Growth

18 May 2012

INDIA - Sugarcane production in India for 2012/13 is expected to continue its strong growth for the third consecutive year. Sugarcane area plantings are expected to expand 3 per cent to 5.25 million hectares. Sugarcane production is forecast at 365 mmt, about 5 per cent more than last year.

Of this amount, 270 mmt is intended for centrifugal sugar production. The remaining 90 mmt is for seed (46 per cent), noncentrifugal lump sugar, or gur (47 per cent), and khandsari sugar (7 per cent).

Although domestic wholesale sugar prices have been soft, between $540 and $600 per mt, the prospect of strong export sales is expected to help processors maintain strong cash flows and avoid cane payment arrears to producers. Sugar production is forecast at 29.00 mmtrv, or 29.75 mmtrv if khandsari (a lowrecovery form of centrifugal sugar) is included.

Sugar consumption in 2012/13 is forecast at 26.5 mmt, about 3.9 per cent higher than in 2011/12. The growth is aided by a 1.8-per cent increase in population and the expectation of continued overall growth in the economy.

The Government of India reduced the import duty on high fructose corn syrup (HFCS) from 30 per cent to 20 per cent. Although this reduction favors more HFCS imports, it remains to be seen if HFCS can capture industrial sweetener consumption at anything above the 5,000 mt estimated for 2010/11.

Indian 2012/13 sugar exports are projected at 2.5 mmtrv. In 2011/12, the Indian Government has allowed 3.0 mmt of exports under the Open General License (OGL). Exports for 2011/12 through the end of March are estimated at 1.3 mmt.

Based on pace to date, total 2011/12 exports will total 2.6 mmt. To guard against food-price inflation without restricting exports, the Indian Government has relaxed sugar import restrictions. The elimination of duties on both raw and refined sugar, expected to last through 2012/13, is especially important. Since December 2011, Government-imposed stockholding limits have also been lifted.

Ending 2012/13 sugar stocks are forecast at 7.28 mmtrv, about 750,000 mtrv more than projected beginning stocks. This amount is considered to be a normal level, corresponding to 3 months of domestic consumption needs.

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May 2012

TheCropSite News Desk

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