The Hindu Business Line : USDA estimates 7.8 mt decline in global sugar output

New Delhi, Nov. 19 The US Department of Agriculture (USDA) has forecast world sugar production for 2008-09 at 158.781 million tonnes (mt) of raw value, against the 166.574 mt of 2007-08.

That works out to a decline of 7.793 mt or 7.169 mt in terms of white sugar (one tonne of white sugar is equivalent to 1.087 tonnes of raw sugar).

CONSUMPTION UP

On the other hand, global consumption is slated to go up from 157.124 mt in 2007-08 to 162.082 mt in 2008-09.

This means that, unlike last year, this year’s output will trail consumption by 3.30 mt.

The biggest contributor to the 7.793 mt projected decline is India, which could register a drop of 5.71 mt (from 285.80 mt to 228.70 mt).

OTHER COUNTRIES

Other major countries/regions to see lower production in 2008-09 include the European Union (17.74 mt to 16.90 mt), China (15.898 mt to 15.785 mt), the US (7.394 mt to 6.968 mt), Australia (4.939 mt to 4.90 mt), Pakistan (4.163 mt to 3.562 mt), Russia (3 mt to 2.95 mt), Ukraine (2.01 mt to 1.30 mt) and Philippines (2.455 mt to 2.20 mt).

These would, however, be partially offset though higher production in Brazil (from 32.10 mt to 32.45 mt), Thailand (7.82 mt to 7.90 mt), Indonesia (1.95 mt to 2.06 mt) and Turkey (1.8 mt to 2.1 mt).

Impact on prices

What is clear from this is that the fundamentals for sugar are bullish and, according to the USDA, “consumption looks to continue to outstrip production” even in 2009-10.

But what effect these would have on prices is difficult to predict, given the current global liquidity crunch and the exit of speculative funds from commodities. “The market seems to be driven by macroeconomic factors as much as fundamentals,” the agency has pointed out.

INDIA-NET IMPORTER

In the case of India, USDA has projected the country to emerge as a net importer after three years in 2008-09.

In 2007-08, India exported 4.9 mt and did not import at all. But for 2008-09, the USDA forecasts exports to fall to 0.3 mt and imports to touch one mt “due to tight domestic supplies and expected relaxation in the Government’s policy for raw sugar imports”.

Meanwhile, it is learnt that the Centre has officially revised downwards its estimates of domestic white sugar output for the 2008-09 season (October-September) to 20.50 mt against the earlier forecast of 22 mt.