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G Chandrashekhar

Washington , Dec. 1

WITH global sugar production poised to remain high in 2003-04 and consumption continuing to trail supplies, the world sugar market is unlikely to get out of the low-price syndrome anytime soon.

Prices are expected to continue to be under pressure in the coming months making exports from origins such as India more challenging.

India, however, is poised to buck the global trend. The country is going to face, for the first time in five years, the situation of sugar consumption outstripping production, leading to considerable drawdown of stocks. The year may end with the inventory level falling considerably below the 10-million-tonne (ml.t.) mark.

World sugar production is forecast to reach 144.6 ml.t. (raw value) in 2003-04. In its latest forecast, the US Department of Agriculture (USDA) has raised the production number by some six ml.t. as compared with the forecast made in May this year.

This follows greater production in Brazil and Asia (mainly India). The USDA had raised production and consumption numbers for 2002-03 also.

World consumption, on the other hand, is expected to grow at a slow pace.

Consumption is forecast to be down in the US, Western Europe, Eastern Europe, West Asia and Africa.

In Central and South America, sugar use will be steady, while it is poised to rise in Asia.

For 2003-04, USDA has placed global sugar consumption at 139.3 ml.t., up from the revised 137.7 ml.t. for 2002-03, while exports are estimated at 45.1 ml.t. for the current year (45.7 ml.t.).

Brazil will continue to be the leader in world sugar production (22.4 ml.t.) and exports (12.4 ml.t.), while India's sugar production in the 2003-04 season, which began in October, is expected to fall from the high level of 2002-03 (22.1 ml.t. raw value) to 19.9 ml.t, a drop of by some 10 per cent.

This follows a decline in sugarcane output to around 265 ml.t. as the crop in some of the important States such as Maharashtra suffered due to moisture stress despite an overall satisfactory South-West monsoon.

Indian sugar production includes khandsari sugar, a native-type semi-white centrifugal sugar.

For 2003-04, sugar consumption in India is forecast by USDA at 21.5 ml.t., up from 20.7 ml.t last year.

There is every chance that actual consumption may exceed the forecast figure as a surge in rural incomes following a rebound in agricultural output will boost demand.

With world sugar prices facing pressure of large supplies and sluggish demand growth, India's export prospects do not seem bright on current reckoning.

A firming rupee too is a factor to be reckoned with. But inland transport and ocean freight subsidies offered by the Central Government may not be enough to push exports up. The policy makers and industry must jointly push domestic sales in an aggressive manner.

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