Sugar export ban in India may benefit Thailand

India's continuing ban on sugar exports may benefit the sugar industry in Thailand where the crushing season is likely to begin in the first week of December.

Thailand is the biggest sugar exporting country in Asia and it is expected to have a bumper crop of sugarcane. The average annual sugar export from Thailand is around 4 million tonne.

Sugar importing countries like Indonesia, Sri Lanka and Bangladesh are likely to buy more from Thailand than from India. On July 4, the government with a view to control the rising prices of essential commodities banned the export of sugar till March 31.

As a result of good rains, Thailand's Cane and Sugar Board has revised up its forecast for 2006-07 sugarcane production by 4 per cent to 59.78 million tonne from the July projection of 57.30 million tonne.

The sugarcane crop in 2006-07 is expected to be 28 per cent higher than the actual output of 46.69 million tonne of sugarcane in the 2005-06 crop year.

India is expected to produce about 23 million tonne sugar in the current season as against 19.1 million tonne in the last season. The annual consumption is 19 million tonne.

The ban is about to enter its six month and there is no clear picture with regard to the lifting of the ban. India's absence from the international sugar market due to the ban may be capitalised by Thailand.

There is a likelihood of the ban getting lifted in December. However, any extension beyond that is likely to hit the country's sugar exports hard.

The international price of sugar has already declined significantly from about $490 a tonne in July to $350 a tonne.

At the National Commodity and Derivatives Exchange (Ncdex), M-sugar for December delivery has declined from Rs 1,779 per quintal last Monday to Rs 1,755 while the same for January delivery has fallen from Rs 1,756 per quintal to Rs 1,735.

In the spot market too, sugar has lost Rs 50-70 per quintal and is currently trading at Rs 1,650-1,700.