Sugar Output in India to Beat Forecast, Halt Imports (Update1).

 July 1 (Bloomberg) -- Sugar output in India, the world’s biggest user, will exceed a government forecast because of an increase in the area planted to cane, a producers’ group said.

Production will be 24 million to 25 million metric tons in the year starting Oct. 1, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd., in a telephone interview. Output may be 23 million tons, matching demand, the government said on June 29.

Increased output from the second-biggest producer may add to global surplus forecast at 5.64 million tons for the 2010- 2011 season by Fortis Bank Nederland and VM Group and pressure prices that have slumped by half from a 29-year high in February. The country has been a net buyer of the commodity since 2008 after sugar cane growers switched to planting wheat and oilseeds.

“There won’t be any need to import, not even for building inventories,” as the nation may have a 4.8 million ton surplus from the current season, said Kumar.

The area planted with cane is 22 percent more than a year earlier, and higher than the 13 percent increase estimated by the government, said Kumar, whose group accounts for 45 percent of the nation’s production.

“Farmers have responded well to prices,” he said.

White sugar for October delivery declined as much as 0.6 percent to $466.5 a ton in London. Raw-sugar for delivery in October dropped as much as 1.2 percent to 15.87 cents a pound in after-hours trading on ICE Futures U.S.

Bore Wells

“Sugar is mostly irrigated in Uttar Pradesh and they can withstand a delay of a week to 10 days in monsoon,” he said.

The monsoon, the main source of irrigation for the nation’s 235 million farmers, may reach the rice and cane-growing regions in the north region after four or five days, D. Sivananda Pai, a director at the weather office, said in an interview today.

Rains have not moved beyond some parts of Madhya Pradesh, the largest soybean-growing state, since June 16, and over the northeast regions since June 18, he said.

Source : Business Week