Indian Sugar Exports May Drop Next Year, Jain Says

Sugar exports from India, the world's biggest producer after Brazil, may drop 80 percent next year as production declines, supporting global prices.

Shipments may total ``no more than'' 1 million metric tons in the year ended Sept. 30, 2009, down from 4.5 million tons this year, S.L. Jain, director general of the New Delhi-based Indian Sugar Mills Association, said in an interview. The group forecast in June that mills may ship as much as 2.5 million tons.

A decline in Indian shipments may sustain a 29 percent rally that made sugar the biggest gainer on the Standard & Poor's GSCI index in the past three months. Global demand will exceed supply by 3.3 million tons next year, down from a surplus of more than 11 million tons this season, Czarnikow Group Ltd. said in a report Aug. 15.

``I'm not expecting large exports next year, certainly not more than 1 million tons,'' Jain said yesterday. Indian mills have exported 4.3 million tons so far this year, he said.

India's production may drop 17 percent in the year starting October to 22 million tons from 26.5 million, Jain said. The association in July forecast output at 20 million tons because of insufficient rain in Maharashtra state, the biggest producer.

Monsoon Rainfall

The June-September monsoon, which accounts for four-fifths of the country's rainfall, was 36 percent above average last week, according to the weather office. Rains in July, the wettest month in the four-month rainy season, were 18 percent less the average of 293 millimeters (11.5 inches).

``Rains have revived of late,'' he said. ``Taking this into account production may not drop as much as we had expected.''

Jain's forecast compares with the 22 million tons predicted by the London-based International Sugar Organization. Czarnikow expects output to drop to 23.9 million tons from 28.9 million as farmers switch to crops including rice and pulses.

Sugar for October delivery gained 4.2 percent to 13.67 cents a pound yesterday on ICE Futures U.S., the former New York Board of Trade. White sugar futures increased 4.4 percent to $389.50 a ton in London.