Macquarie poured cold water on ideas that India will remain a sugar exporter next season, and raised doubts over 2013-14 too, saying a weak monsoon and huge arrears in payments to cane farmers will fuel another downswing in the country’s production cycle.
The Indian Sugar Mills Association forecast last week that India, the world’s second-ranked sugar producer, will export 2.5m-3.0m tonnes of the sweetener in 2012-13, which starts on October 1, with shipments supported by high inventories and production of 25m tonnes.
However, Macquarie, warning that cane yields “will fall sharply in southern states due to adverse weather”, cautioned that output would fall further, to 24.2m tonnes, dropping below consumption.
“As India’s domestic consumption keeps rising, and production set to fall for the first time in four years, we question whether India can afford to remain a net exporter next season [2012-13],” Macquarie analyst Kona Haque said.
Exports would risk “stocks falling to uncomfortable levels”, further inflating domestic sugar prices which have soared 25% since June on fears for the next cane harvest.
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