India sugar output may fall below trade f'cast - min

India's sugar output this year may contract more than trade estimates and the country may import up to 2 million tonnes of raw sugar, the farm minister said on Tuesday.

Trade officials have estimated sugar production in India, the world's largest producer of the sweetener after Brazil, would fall by a third to 18 million tonnes in the year to September 2009, due to lower cane output and falling yields.

"Latest figures seem to be somewhat about 16.5 (million tonnes) and carry stock, last year's, is about 10 (million tonnes)," the farm minister, Sharad Pawar, told reporters.

This month, the government eased the rules for raw sugar imports, which traders have said may amount to 1.5-2.0 million tonnes.

"Looks like about 1 million must have come or been processed, and another either half a million or 1 million there is an immediate possibility to come," Pawar said, citing estimates of the sugar trade and port officials.

Benchmark sugar prices in New York have risen on expectations of imports by India, the largest consumer of the sweetener.

Domestic prices too have risen, with those in the western state of Maharastra, the top producing region, rising to about 21-22 rupees a kilogram from closer to 16 rupees six months ago.

"We have released more than normal, but still the prices are going up. So let us see what happens," Pawar said.

On Monday India said it would impose stock limits on traders to prevent sugar hoarding and lower prices, and traders say the decision would ease the tight supply in India.

The news knocked Indian sugar futures, which breached a 3 percent circuit breaker on Tuesday, while spot prices in top producing state Maharashtra fell 1.7 percent.

"The stock limit will help cool off firm prices and will also impact the futures prices," Mohan Gurnani, chairman of the Bombay Sugar Merchants Association Ltd, said.

India last imported sugar in 2004/05.

For a graphic on India's sugar production and consumption, click: https://customers.reuters.com/d/graphics/IN_PRD0109.gif

For a graphic on India's sugar imports and exports since 1995/96, click https://customers.reuters.com/d/graphics/IN_SGIMEX0109.gif

Pawar also said his ministry would push to ease a ban on exports of wheat products.

"Value added products is one of the suggestions before us, and we'll take the same, I think," he said. "Our recommendation will be wheat products, and use the opportunity for utilisation of our own domestic capacity plus jobs."

Source: http://in.news.yahoo.com/