Sugar Mills in India Seeking More Exports May Widen Supplies, Lower Prices.

Sugar mills in India, the second- biggest producer, is seeking to export more sweetener after winning government approval yesterday to ship 500,000 metric tons, potentially widening global supplies and lowering prices.

A government panel allowed additional exports after domestic stockpiles swelled from the highest output in three years. Mills may have as much as 1 million tons of sugar for exports from the crop season ending Sept. 30, Abinash Verma, director general of the Indian Sugar Mills Association, said in a phone interview from New Delhi today.

Increased Indian exports may accelerate a 19 percent decline in sugar prices in New York this year and help cap global food costs that the United Nations estimates climbed to a record in February. Global supplies will outpace demand by 10.3 million tons next season, reversing a shortage of 500,000 tons this year, as producers respond to high prices, according to C. Czarnikow Sugar Futures Ltd.

“India’s return to the market as an exporter is likely to be a key factor in that global equation,” Sudakshina Unnikrishnan, an analyst at Barclays Capital in London, said by phone yesterday. “This is kind of one of those steps which is likely to lead to easing supply concerns in the market.”

Raw sugar for October delivery dropped as much as 6.5 percent to 24.3 cents a pound on ICE Futures U.S. in New York, before ending 0.3 percent higher at 26.08 cents a pound. Futures reached a 30-year high of 36.08 cents in February.

Global Declaration

Group of 20 farm ministers yesterday agreed to a plan to set limits on export bans and create a crop database to tackle what French President Nicolas Sarkozy called the “plague” of rising food prices. The agreement includes a call for international market regulation, more agriculture production and the development of a proposal for emergency food reserves, the ministers said in a declaration in Paris yesterday.

India has now permitted mills to ship 2.2 million tons of sugar since the crop season began on Oct. 1. Output in the 2011- 2012 season may climb as much as 9.5 percent to 26.5 million tons from an estimated 24.2 million tons this season, according to the sugar mills association.

“We would like more exports to happen before the end of the season,” Verma said. “With the latest approval, carryover stocks will be around 5.7 million tons to 6 million tons this year, still higher than the 5 million tons we had last year.”

Inventory with mills totaled 14 million tons at the end of last month, according to the group.

Farmers in India have planted sugar cane in 5.09 million hectares (12.6 million acres) as of June 17, 223,000 hectares more than a year earlier, according to the farm ministry.

Source : bloomberg.com