Sugar Sales From India May Miss Forecast as Bulk Consumers Build Stockpile.

India, the largest sugar user, may export less than forecast and shipments should be spread out to prevent global prices from slumping, a millers’ group said.

The surplus available for sales overseas may be 2 million metric tons in the year started Oct. 1, compared with the 2.5 million tons forecast in September, as industrial users rebuild stockpiles after two years of imports, according to the National Federation of Cooperative Sugar Factories Ltd.

“We’re not that much glutted with production,” Jayantilal Patel, president of the group, said in a phone interview today. “Exports should be allowed in stages, may be half-a-million tons at a time, to ensure global prices don’t collapse and we get the full benefit of high prices.”

Raw sugar reached a 29-year high yesterday as dry weather crimps output in Brazil, the top producer, and on speculation that India may cap exports to boost domestic supplies. Futures yesterday reached the highest level for a most-active contract since Jan. 15, 1981.

Sugar has more than doubled since touching a 13-month low on May 7 on concern that adverse weather will reduce output in Brazil, Russia, China and Pakistan. Supplies are “extremely tight” and bad weather in producing countries makes a global surplus unlikely, Czarnikow Sugar Futures Ltd. said Oct. 6.

Futures for March delivery rose as much as 1.4 percent to 30.53 cents a pound in after-hours trading on ICE Futures U.S. in New York. White sugar climbed to $756.60 a ton in London, the highest price for a most-active contract since Jan. 26.

‘Crop Deficit’

“Global prices will remain firm until February 2011 as no major supplies will be available in the market,” Sanjay Manyal and Parineeta Poddar, analysts at ICICI Securities Ltd. said in a note today. “The crop deficit in Europe and Pakistan is also increasing import demand from these countries.”

India was the largest buyer last year as adverse weather damaged crops. Its reserves are at about 4 million tons, less than the nation’s preferred level of 10 million tons, according to Rabobank International.

The country may consider allowing exports in the second week of this month, Farm Minister Sharad Pawar said last week. Shipments may start next month and the government is likely to hasten applications from mills for about 500,000 tons, Economic Times reported today, citing an official it didn’t identify.

Production will reach 25.5 million tons and demand may be around 23 million tons in the year ending Sept. 30, National Federation’s Patel said. Processing of cane in Maharashtra, the biggest producer, and Gujarat has been delayed by rain, he said, adding excess rain is lowering the sugar-recovery rate.

India may not export more than 1 million tons this crop year as production may be lower than 25 million tons as floods damaged crops in Uttar Pradesh, the country’s biggest cane- growing state, ICICI Securities said.

Source : bloomberg.com