We generally consider that sugar follows a six-year cycle. Where are we at this point in time and how do you expect it to pan out?
The Indian sugar cycle lasts four-five years and we are currently in the trough phase. The years 2008-09 and 2009-10 were deficit years due to poor sugarcane supply. This prompted domestic prices to rise and resulted in a significant upward adjustment in sugarcane prices.
However, this adjustment came too late to affect the crop in 2009-10, but should prompt a significant recovery in cane output during 2010-11. India should enter the upswing phase in the next season that could last well into 2011-12. By 2012-13, the cycle should be complete.
The Indian government is taking steps to contain prices as they impact inflation. Will this help the worsening sugar situation in India?
There is an extremely delicate balance between an anti-inflationary government policy and availability of sugar as basic foodstuff for the bulk of India’s population. What is clear is lack of alignment between cane and sugar prices under the existing regulatory framework. This is expected to ensure cyclicality of sugar production in India.
What are your estimates for global sugar demand and supply for this year and next year?
The world sugar market will be in deficit for the second consecutive season during 2009-10. World production is pegged at 157 million tonnes, up by 3.07 per cent from the last season.
Generally, sugar crops in the world’s leading producing countries — except the EU, Russia, and, probably, India — are now likely to be lower than the expectation at the beginning of the season. World consumption is expected to grow at a rate significantly lower than the long-term 10-year average and should reach 166 million tonnes in 2009-10.