Govt ups sugar output to 13 mt

The latest official reckoning puts the current year's likely sugar production at around 12.9 to 13 million tonne, against the earlier apprehension of a below 12.5 million tonne output.

The present cane crushing season is virtually over and the next would begin from around October 2005.

The improvement in sugar production, coupled with the carry-forward inventory of 8.5 million tonne from the previous season and import of around 2 million tonne of raw sugar, has pushed up total sugar availability for 2004-05 sugar year (October-September) to a fairly comfortable level.

About 1.8 million tonne of raw sugar has already been imported under the advance licensing scheme for re-export after refining within 36 months. Another three to four lakh tonne of imports are in the pipeline.

"We may have a season-end carryover sugar stock of between 4.5 million tonne and 5.5 million tonne in September 2005", food secretary S. K. Tuteja told the Business Standard.

"With area under sugarcane anticipated to expand in response to good prices received by cane growers this year, the sugar output next year might spurt appreciably to around 18 million tonne," he said.

Tuteja attributed the sobering effect on sugar prices in both the spot and futures markets to improved domestic sugar supply scenario and about 10 per cent drop in international prices of sugar.

Besides, the speculators, which were pushing up the prices till February-March in anticipation of supply constraints, were now offloading the stocks.

He said the food ministry was not contemplating any intervention in sugar futures trading or the functioning of the commodity exchanges in the wake of reports attributing the price slide to their disabilities.

"The Forward Markets Commission being the regulator of these exchanges would act, if need be. The food ministry would worry only if the prices rise too much or crash drastically," he said.

The commodity exchange NCDEX has also attributed downturn in sugar futures prices to factors such as fall in international futures prices, softening of domestic spot prices in the physical market and absence of major buyers in the current calendar quarter due to previous over-stocking.

Ruling out any procedural loophole being responsible for downwards movement of prices in the futures commodity exchange, NCDEX has clarified to the government that the April contracts saw actual deliveries of over 13,000 tonne, or 97 per cent of the open interest in sugar futures.

This showed that merely 3 per cent of the open interest position was settled in cash, paying 0.5 per cent penalty. It also indicated wide participation of actual stakeholders in the sugar futures trading.