Global sugar prices decline on bumper Indian output

White sugar fell for a third day in London, trading at the lowest in 14 months, as increased production in India added to concern that a global surplus may widen.

Output in India, the world's biggest consumer and the second-largest producer, rose 20 per cent to 9.7 million tonne between October 1 and January 15, the Indian Sugar Mills Association said today. Sugar prices have dropped more than 35 per cent from a record $497 a metric in May as India and Brazil, the biggest producer, harvested bumper crops.

"Sugar is looking bearish, even at these levels,'' Jonathan Boyden, head of sugar trading at Ambrian Commodities, said in a telephone interview today. There could be some "short-term bounces, with such a huge surplus and well-supplied market.'' Ambrian Commodities is the commodities trading subsidiary of Ambrian Capital Plc, a London-based investment bank.

Refined, or white, sugar futures dropped as much as $1, or 0.3 per cent, to $322 on the Euronext.liffe exchange in London, the lowest since December 2, 2005. They traded at $322.50 as of 10:27 am local time.

Indian sugar planters produced 8.1 million tonne in the year-earlier October to January period, Vimal Jain, secretary, statistics, at the New Delhi-based Indian Sugar Mills Association said in a phone interview. The country's sugar cane-crushing season runs from October to September.

Sugar dropped yesterday on concern that exports from Thailand, the world's fourth-biggest seller of the sweetener overseas, may more than double this year as wetter weather and expanded planting boost production, the Thai Cane and Sugar Corp. said.

This compounded concern that a global surplus, estimated to be 7 million tonne in the year ending September 30, according to the International Sugar Organisation, may widen.

India may produce a record 24 million tonne, and China, the third-largest producer, will boost output 22 per cent to 11 million tonne, the London-based ISO said in a report on February 6.