Falling demand to curb Indian sugar imports - ISMA

By Ana Ionova

GENEVA (Reuters) - Declining sugar sales in India, the world's biggest consumer, has left the country with enough stocks until the next crop, the Indian Sugar Mills Association said on Tuesday, ruling out the need for more imports later in the year.

Indian sugar sales are seen down 1 million tonnes from the start of the season in October 2016, said Abinash Verma, director general of ISMA, at an industry conference in Geneva.

He pegged the decline partly on higher domestic prices and the effect of demonetisation, under which high-value banknotes were scrapped. The government's decision to abolish a subsidy for sugar given to poor families, which accounts for about 10 percent of sugar sales, also took its toll, he said.

 

"Poorer families will have to buy the same sugar at three times the price," Verma told the Kingman EU Sugar Seminar. "That used to be a very cheap source of energy for them."

Total Indian demand is seen at 23.8 to 24 million tonnes for the 2016/17 season, compared to typical annual demand of about 25 million tonnes.

ISMA expects production for the season to total 20.2 million tonnes, just below its previous estimate of 20.3 million tonnes.

But ending stocks are seen between 4.55 and 4.75 million tonnes, which gives India a big enough supply cushion until sugar from the new 2017/18 crop hits the market in late October, Verma said.

"One thing is clear - we have enough sugar in the country if you add the opening stocks and we still have something left to be carried forward into next year," Verma said.

"We do not need any sugar imports for the next year. The half million tonnes that have already been decided to be imported are good enough."

Earlier this month, India allowed duty-free imports of 500,000 tonnes of raw sugar. This was lower than expected, fuelling speculation that India could allow further imports later in the year. [nL3N1HD1S3]

Verma added that crushing in Maharashtra, one of the country's key producing states, is expected to begin in early October, with sugar from the region ready for sale earlier than usual.

Demand in the weeks before sugar from the new crop is available is expected to be met with opening stocks, which are seen lasting until at least late November.

(Reporting by Ana Ionova, editing by David Evans)