PRINTABLE VERSION   EMAIL TO A FRIEND   RSS FEEDS 11:08 UK, 1st May 2014, by Agrimoney.com
India's sugar exports to stay, relatively, subdued

India's sugar exports will prove, relatively, weak next season despite the government's controversial subsidy, US officials said and even that forecast makes no allowance for the threat of a weak monsoon.

The US Department of Agriculture bureau in New Delhi forecast India's sugar exports this season at 1.8m tonnes, 200,000 tonnes below the USDA's official estimate, as well as the average of 2.0m tonnes for the previous decade.

The bureau derived its estimate in part from the "current pace" of trade, which suggests some 400,000 tonnes shipped in April and May, on top of the 850,000 tonnes of raw sugar already exported.

And it forecast shipments in 2014-15, starting in October, at 1.5m tonnes, well below the average pace.

'Exports from India have slowed'

The forecast of relatively weak shipments comes despite a push by India's government to boost exports through a subsidy introduced at 3,300 rupees ($54) a tonne, but about which there is a question mark over the current rate.

Indeed, despite the perk, which has been lambasted by rival sugar exporters such as Australia and Brazil, India's sugar exports have proved relatively slow thanks to a pick-up in local prices.

Citigroup on Wednesday noted that "exports from India have slowed, and stopped in some cases, as domestic prices are higher than the world price and the government has not yet announced incentives for raw sugar production for the months of April and May".

Big assumption

The USDA bureau assumed a "normal monsoon and favourable planting conditions" in its forecast, leading to a cane harvest of 350.8m tonnes, up 4.0m tonnes year on year, and sugar output up 850,000 tonnes at 27.9m tonnes.

However, it acknowledged that "sugar industry sources believe that it is too soon to make predictions regarding productivity".

Indeed, many observers have highlighted the potential for depressed yields, given the prospect of an El Nino weather pattern, linked to warm Pacific water temperatures, which often brings dryness to much of Asia.

El Nino forecasts

Australia's Bureau of Meteorology (BoM) warned of an increasing risk of an El Nino, which could develop as soon as July.

David Jones, BoM manager of climate monitoring and prediction, said that "we know from the past that many of the most significant droughts in Australia, Indonesia, Malaysia and through India and so on, do occur during El Nino events".

The US Climate Prediction Centre has pegged the chance of an El Nino at 65%, while in India itself, official meteorologists have estimated at above 50% the chance of below-normal monsoon rains.

'Strong domestic demand'

The USDA bureau forecast India's sugar consumption in 2014-15 at 27.0m tonnes, up 1.0m tonnes year on year, "because of continued strong domestic demand", and limiting to less than 1m tonnes the country's production surplus.

Indian economic growth, forecast by commentators such as the World Bank at 5-6%, and population expansion running at 1.7% a year "suggest that sugar consumption will continue to increase".

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