Sugar Semi-annual 2011

An Expert's View about Food , Beverages and Tobacco in India

Posted on: 13 Nov 2011

Post has raised sugarcane planted area for the October-September marketing year (MY) 2010/11 to 4.93 million hectares and production has been revised down to reflect the latest official statistics. Domestic sugar consumption in MY 2010/11 and 2011/12 have been lowered to reflect revised consumption and stock estimates.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Required Report - public distribution Date: 10/20/2011 GAIN Report Number: IN1199 India Sugar Semi-annual 2011 Approved By: Thom Wright Prepared By: Amit Aradhey Report Highlights: Post has raised sugarcane planted area for the October-September marketing year (MY) 2010/11 to 4.93 million hectares and production has been revised down to reflect the latest official statistics. Domestic sugar consumption in MY 2010/11 and 2011/12 have been lowered to reflect revised consumption and stock estimates. The sugar export forecast for MY 2011/12 has been raised to 2.5 million tons on expected strong export demand. Based on recent official and industry estimates, sugar exports in MY 2010/11 are also up at 3.2 million tons. Commodities: Sugar, Centrifugal Sugar Cane for Centrifugal Production: Based on the latest planting progress report from the Ministry of Agriculture, sugarcane has been planted on 5.1 million hectares. Good monsoon rains and favorable weather conditions in major sugarcane producing regions are supporting higher sugarcane production. Post continues to forecast sugarcane and centrifugal sugar production in the October-September marketing year (MY) 2011/12 at 350 million tons and 28.3 million tons respectively (Table 1). MY 2010/11 sugarcane planted area has been raised to 4.93 million hectares and production has been marginally lowered to 340 million tons based on the latest official statistics. Similarly, 2009/10 cane production has been raised to 292.3 million tons (Table 2). (Note: Please refer to IN1137 for information on production policy). Consumption: Post?s MY 2011/12 consumption forecast has been revised lower to 25 million tons on expected tight domestic supplies. MY 2010/11 consumption has also been revised lower to 23 million tons due to higher than anticipated exports (Table 1). MARKET PRICES MY 2011/12 late season sugar prices have been firm due to seasonal demand and strong export off-take (Table 5). Currently, sugar prices in the major domestic wholesale market in India range from $550 to $615 per ton. Although end-season gur prices are relatively firm (Table 6) due to lower end-season gur production, gur prices in MY 2011/12 will largely be guided by the sugar price movement (Figure 1). (Note: Gur is a non-centrifugal crude sugar in lump form). Figure 1. Sugar and Gur Prices in the Delhi Market Source: Industry and Trade Sources. Trade: Exports: Post?s MY 2011/12 export forecast has been raised to 2.5 million tons on expected strong export demand. Based on recent government and industry estimates, sugar exports in 2010/11 were also raised to 3.2 million tons. The latest export statistics available from October 2010 through March 2011 indicate that India exported over 2.7 million tons of sugar, mostly to Thailand, UAE, Singapore, Malaysia, Iran, Yemen, Kenya, Djibouti, Bangladesh, and other neighboring countries such as Sri Lanka and Pakistan. Based on information from industry sources, over 500,000 tons of sugar has been exported in the second half of MY 2010/11 (April 2011 through September 2011). Imports: Sugar imports in MY 2010/11 have been lowered to 405,000 tons to reflect current official and industry estimates. Trade Policy: The Government of India (GOI) extended duty-free imports of raw and white sugar until March 31, 2011. On April 1, 2011, the 60-percent import duty structure was reinstated. Two weeks later, the GOI abolished the import duty on raw and white sugar until June 30, 2011 through notification (No-34/2011 - Customs dated April 15, 2011). Further, through a series of notifications, (No-55/2011 and No-81/2011 - Customs), the GOI extended duty-free imports of raw and white sugar through November 30, 2011. In 2010/11, the GOI allowed exports of 2.8 million tons of sugar [1.2 million tons (raw value) under the Advance License Scheme (ALS) and 1.6 million tons (raw value) under open general license (OGL)] to augment liquidity of sugar mills and to enable them to settle their arrears. The Directorate of Sugar, GOI, through a circular released on January 1, 2011, decided to export 500,000 tons of raw, white and refined sugar under OGL, but actual sugar exports were ?allowed? through another circular issued on April 19, 2011, superceding its previous circular dated January 1, 2011. (Circulars are available at Export Orders OGL, Directorate of Sugar, GOI). In addition to exports allowed under OGL and ALS, an estimated 400,000 tons of raw sugar were exported in 2010/11. The additional exports were re-exports of raw sugar (stocked in ports) that were imported in 2008/09 and 2009/10 to augment domestic supplies, but were not utilized due to logistical and economic constraints. Stocks: Post?s MY 2011/12 ending stocks are forecast higher at 6.9 million tons which is sufficient to meet the normal stock requirements (3 months consumption). Production, Supply and Demand Data Statistics: Table 1. India: Commodity, Centrifugal Sugar (raw value basis), PSD Figures in ?000 metric tons (MT) 2009/2010 2010/2011 2011/2012 Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct Sugar, Centrifugal 2009 2010 2011 India USDA O Old New USDA New USDA fficia P O Old fficia O Old New fficia ost Post Post Post Post Post l l l Beginning Stocks 3,510 3,510 5,361 4,664 4,664 5,204 6,994 6,214 6,059 Beet Sugar Production 0 0 0 0 0 0 0 0 0 Cane Sugar Production 20,637 20,63 20,63 26,650 26,65 26,65 28,300 28,30 28,30 7 7 0 0 0 0 Total Sugar Production 20,637 20,63 20,63 26,650 26,65 26,65 28,300 28,30 28,30 7 7 0 0 0 0 Raw Imports 3,340 3,340 1,701 1,000 1,000 402 100 100 0 Refined Imp.(Raw Val) 907 907 730 200 200 3 0 0 0 Total Imports 4,247 4,247 2,431 1,200 1,200 405 100 100 0 Total Supply 28,394 28,39 28,42 32,514 32,51 32,25 35,394 34,61 34,35 4 9 4 9 4 9 Raw Exports 42 42 53 0 0 700 0 0 0 Refined Exp.(Raw Val) 188 188 172 20 800 2,500 1,800 1,800 2,500 Total Exports 230 230 224 20 800 3,200 1,800 1,800 2,500 Human Dom. 23,500 23,50 23,00 25,500 25,50 23,00 26,500 26,50 25,00 Consumption 0 0 0 0 0 0 Other Disappearance 0 0 0 0 0 0 0 0 0 Total Use 23,500 23,50 23,00 25,500 25,50 23,00 26,500 26,50 25,00 0 0 0 0 0 0 Ending Stocks 4,664 4,664 5,204 6,994 6,214 6,059 7,094 6,314 6,859 Total Distribution 28,394 28,39 28,42 32,514 32,51 32,25 35,394 34,61 34,35 4 8 4 9 4 9 Note: Stocks include only milled sugar. All khandsari sugar (a low-recovery centrifugal sugar) is consumed within the marketing year. Virtually no centrifugal sugar is utilized for alcohol, feed, or other non-human consumption. Table 2. India: Commodity, Sugarcane, Centrifugal, PSD Area in ?000 hectare and others in ?000 MT 2009/2010 2010/2011 2011/2012 Sugar Cane for Cent Market Year Begin: Oct Market Year Begin: Oct Market Year Begin: Oct rifugal 2009 2010 2011 India USDA O Old New USDA O SDA ld New U New ffici Post P Officiost P O Old ffici ost Post Post Post al al al Area Planted 4,180 4,200 4,200 4,810 4,810 4,930 5,200 5,100 Area Harvested 4,180 4,200 4,200 4,810 4,810 4,930 5,200 5,100 Production 277,80 277,80 292,30 328,00 340,54 340,00 350,00 350,00 0 0 0 0 0 0 0 0 Total Supply 277,80 277,80 292,30 328,00 340,54 340,00 350,00 350,00 0 0 0 0 0 0 0 0 Utilization for Sugar 190,80 185,54 185,55 237,00 245,00 245,00 255,00 255,00 0 8 0 0 0 0 0 0 Utilizatn for Alcohol 87,000 92,252 106,75 91,000 95,540 95,000 95,000 95,000 0 Total Utilization 277,80 277,80 292,30 328,00 340,54 340,00 350,00 350,00 0 0 0 0 0 0 0 0 Note: Virtually no cane is utilized directly for alcohol production. ?Utilization for alcohol? in the PS&D includes cane used for gur, seed, feed and waste. ?Utilization for sugar? data include cane used to produce mill sugar and khandsari sugar. Table 3. India: Sugarcane Area, Production, and Utilization Area in million hectares, yield in metric tons per hectare, and others in million metric tons Sugar Cane Area1 Yield1 Production1 Suga 2r Khandsa 3ri Gur 3 Seed3 Mha MT/ha MMT MMT MMT MMT MMT 1985/86 2.86 59.99 171.68 68.98 10.48 71.62 20.60 1990/91 3.69 65.39 241.05 122.32 13.18 76.63 28.93 1995/96 4.15 68.02 282.09 174.76 10.00 67.27 30.06 2000/01 4.32 68.49 295.60 176.65 11.00 72.48 35.47 2001/02 4.41 67.38 297.21 180.32 10.50 70.73 35.67 2002/03 4.52 63.58 287.38 194.33 9.50 49.07 34.49 2003/04 3.94 59.39 233.86 132.51 10.00 61.35 30.00 2004/05 3.66 64.74 237.09 124.77 9.50 74.37 28.45 2005/06 4.20 66.93 281.17 188.67 8.50 50.26 33.74 2006/07 5.15 69.03 355.52 279.25 7.50 26.11 42.66 2007/08 5.06 68.81 348.19 249.91 7.00 49.50 41.78 2008/09 4.40 64.77 285.00 145.00 6.50 99.30 34.20 2009/10 4.20 69.60 292.30 185.55 6.50 65.17 35.07 2010/113 4.93 68.97 340.00 245.00 7.00 47.20 40.80 2011/123 5.10 68.63 350.00 255.00 7.50 45.50 42.00 Source: 1: Directorate of Economic and Statistics, Ministry of Agriculture. 2: Indian Sugar Mills Association except 2010/11 and 2011/12. 3: FAS/New Delhi estimate. Table 4. India: Industrial Sugar Production by State, in ?000 tons crystal weight basis State 2008/091 2009/101 2010/112 2011/122 Final Revised Revised Forecast Andhra Pradesh 590 520 960 1000 Bihar 210 260 340 350 Gujarat 1010 1190 1400 1500 Haryana 230 250 400 500 Karnataka 1650 2560 3400 3600 Maharashtra 4580 7070 9200 9300 Punjab 240 180 300 400 Tamil Nadu 1600 1280 1700 2300 Uttar Pradesh 4060 5180 6200 6500 Others 350 440 600 600 Total 14538 18912 24500 26050 Note: Excludes khandsari sugar, as state break-out is not available. Source: 1: MY 2008/09 and 2009/10 - Indian Sugar Mills Association. 2: MY 2010/11 and 2011/12 ? FAS/New Delhi Estimate. Table 5. India: Centrifugal Sugar Prices, crystal weight basis, rupees per metric ton Year 2009 2010 2011 % Change Jan 22,350 40,000 29,500 -26% Feb 22,800 35,200 29,650 -16% Mar 22,000 31,250 30,000 -4% Apr 24,250 30,000 29,400 -2% May 24,000 28,500 28,750 1% Jun 24,750 28,000 28,300 1% Jul 25,750 28,500 31,500 11% Aug 30,000 27,250 30,500 12% Sep 29,750 27,500 30,500 11% Oct 32,000 28,000 Nov 34,000 30,000 Dec 38,500 31,000 Exchange Rate 48.32 45.65 49.00 Note: Exchange rate for 2009 and 2010 (shown in rupees per dollar) refers to Indian fiscal years 2009/10 and 2010/11 (April/March). Exchange rate of 2011 refers to the second week of October, 2011. Source & Contract Terms: Indian Sugar Mills Association; month-end prices in the Delhi wholesale market. Table 6. India: Gur Prices, actual weight basis, rupees per metric ton Year 2009 2010 2011 % Change Jan 19,750 30,000 24,000 -20% Feb 20,500 27,500 23,000 -16% Mar 21,000 28,000 25,000 -11% Apr 22,000 28,000 28,000 0% May 23,000 34,000 32,000 -6% Jun 23,000 34,000 32,000 -6% Jul 25,000 34,000 33,000 -3% Aug 25,000 34,000 34,000 0% Sep 26,000 34,000 33,000 -3% Oct 28,000 30,000 Nov 33,750 25,000 Dec 32,000 25,000 Exchange Rate 48.32 45.65 49.00 Note: Exchange rate for 2009 and 2010(shown in rupees per dollar) refers to Indian fiscal years 2009/10 and 2010/11 (April/March). Exchange rate of 2011 refers to second week of October, 2011. Source & Contract Term: Indian Sugar Mills Association; month-end prices in the Delhi wholesale market. Table 7. India: Sugarcane Prices Table, rupees per ton 2008/09 2009/10 2010/11 Minimum Support Price (MSP) or Fair Remunerative Price (FRP) Wheat 10,800.00 11,000.00 11,200.0 Rice (Grade A) 8,800.01 9,800.00 10,300.0 Sugarcane 811.82 1298.43 1391.2 State Advised Price (SAP) for Sugarcane, by State Uttar Pradesh 1400-14504 1650-17005 2050-2100 Haryana/Punjab 1400-1500 1850-1900 1900-2200 Southern State 6s 1200-1600 2000-2400 1750-2300 Notes: 1: An additional bonus of Rs. 500 per MT was paid over the MSP. 2: The MSP for 2006/07, 2007/08 and 2008/09 was linked to a basic recovery rate of 9.0 percent. For every 0.1 percent increase in recovery over the 9.0 percent basic recovery rate, an additional premium of Rs. 9.0/MT was provided. 3: FRP for 2009/10 was linked to a basic recovery rate of 9.5 percent, and for every 0.1 percent increase in recovery over the basic recovery rate, an additional premium of Rs. 13.7/metric tons was provided. 4: Sugar mills paid an additional premium of Rs. 100 to 150 per metric tons to the farmers after the month of January 2009. 5: Sugar mills paid prices above SAP ranging from Rs. 2000/mt to 2800/mt. 6: Sugar mills pay market prices. Exchange Rate 2008/09 (April/March) 1US$= 46.0 Indian Rs. 2009/10 (April/March) 1US$= 47.9 Indian Rs. 2010/11 (April/March) 1US$= 45.7 Indian Rs. Source: Indian Sugar Mills Association.
Posted: 13 November 2011

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