Sugar production in India, the world’s second-largest, may be 8.7 percent less than predicted as rain, pests and disease reduce yields in Uttar Pradesh, the biggest cane-growing state. Output may be 23.27 million metric tons in 2010-2011, according to interviews with 810 farmers across six states by Geneva-based SGS SA for Bloomberg. The Indian Sugar Mills Association and the Maharashtra State Cooperative Sugar Factories Federation Ltd. forecast 25.5 million tons. The government expects 25 million, up from 18.9 million in 2009-2010. A smaller crop may hinder government plans to lift restrictions on sugar exports, reducing global supply at a time of sustained demand from importers. Prices climbed to 33.39 cents a pound on Nov. 11, the highest intraday level in almost 30 years, as drought and floods ruined crops from Russia to Pakistan and investors sought refuge from a declining dollar. “There is demand for Indian sugar from Pakistan, China and Russia, and Brazil’s production hasn’t changed,” Abinash Verma, director general of the mills association, said by telephone Nov. 16. “There’s no surplus in the international market.” Brazil is the world’s biggest grower. The global raw-sugar surplus may be 2 million tons in 2010- 2011, below the 3.22 million tons predicted two months earlier, Sergey Gudoshnikov, economist at the London-based International Sugar Organization, said in an interview Oct. 26. Higher Cane Output India will decide whether to end export curbs after receiving “dependable estimates” for output, Farm Minister Sharad Pawar said in a statement to lawmakers Nov. 16. The country may have a 3.5 million-ton surplus, he said last week. An SGS survey last November predicted production of 17.68 million tons in 2009-2010, 11 percent more than forecast at that time by the country’s mills association. The mills group now estimates the 2009-2010 harvest at 18.9 million tons. Cane production in India may climb 28 percent to 355.32 million tons in 2010-2011 from 277.75 million tons the previous year, helped by a 25 percent increase in area and a 2.5 percent improvement in yields, the latest SGS survey showed. The study by five teams between Oct. 16 and Nov. 1 covered six cane- growing states representing 93 percent of output, including Uttar Pradesh and Maharashtra, the biggest growers. About 17 percent of farmers reported damage to cane from heavy rain this year, including 31 percent of those interviewed in Uttar Pradesh and 1 percent in Maharashtra, the survey showed. Rain, Disease The rains increased infestations in Uttar Pradesh, with 16 percent of growers reporting severe attacks, up from 3 percent last year, the survey showed. In Maharashtra, insect and disease outbreaks were less than last year, it said. Growers in most of the states, excluding Tamil Nadu, the third-biggest cane producer, expect lower prices this season compared with a year ago because of bigger harvests, SGS said. Farmers in Uttar Pradesh anticipate an average 220 rupees ($4.8) per 100 kilograms of cane, down from 235 rupees last year, and in Maharashtra they expect 193 rupees versus 224 rupees, it said. Cane supplies won’t be “a constraint,” said Kiran Wadhwana, a director with Comdex India Ltd., a futures broker in New Delhi. “Farmers received good payments last year and mills are prepared to pay fairly good prices” this season, he said. A price dispute delayed crushing last year by as much as a month in Uttar Pradesh. Thousands of growers held demonstrations in November near the parliament in New Delhi, seeking 280 rupees, more than double the government’s benchmark rate of 130 rupees. India’s 50 million cane farmers are a powerful voting block and Uttar Pradesh, home to more than 100 sugar mills, sends the largest number of lawmakers to parliament. To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net To contact the editor responsible for this story: James Poole at jpoole4@bloomberg.net

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