Mumbai, Sept 19 - Indian sugar prices are unlikely to rise steeply despite a drop in output in the year ending September 2009 as millers are still holding stocks from the previous year, a senior industry official said on Friday.
"We are more or less in a balanced situation. One should not fear any steep rise taking place," S. L. Jain, secretary general, Indian Sugar Mills Association (ISMA), told Reuters.
"Prices should remain steady in coming months," he added.
Sugar prices soared in August on expectations output in the year ending September 2009 may drop to about 20 million tonnes from about 27 million tonnes in the current year.
Spot prices in Maharashtra, country's largest producer, rose nearly 10 percent to 1,821 rupees per 100 kg in August.
After the rise, government, which controls the sector, asked millers to sell sugar from buffer stocks, taking total supplies for the month up to 2.1 million tonnes compared to just 1.3 million tonnes in the same month last year.
The millers, earlier this month requested the government to extend the period for sale of buffer sugar.
"The prices have come down. Now that the stability is there the government may think of extending the validity period so that proper pricing continues," Jain said.
"The extention should be coming shortly," he added.
EXPORT DEALS
The Association, a major exporter in the year to September 2008, has so far not struck any deals for exports in the new year and sees a sharp fall in overall expects due to good local prices and a likely fall in the output.
"Its premature to enter into any export commitments. Though we have got inquiries we have not entered into any agreement so far," Jain said.
For the year ending September 2008, India is estimated to have exported a record 4.8 million tonnes against less than 2 million tonnes exported in the previous year, mainly due to exports of raw sugar to Al Kahleej refinery in Dubai.
"We emerged as a major raw sugar exporter in 2008. Only about 2 million tonnes of whites were exported rest was all raw sugar," Jain said.
This year also the association expects Indian firms would export about 1 million tonnes of sweetener. "The cane availability will be less hence the crushing should begin early to capture maximum cane for sugar production," Jain said.
Crushing in major growing states may begin before middle of October, Jain said.
Crushing in Uttar Pradesh, country's second largest producer, usually begins from November but millers may start crushing from early Ocotber this year as a delay in crushing may divert cane for other use, Jain said.
Maharashtra, the top producer, has said it will begin crushing from Oct. 15 onwards.
Last year the state planned to begin crushing from Oct.1, but crushing could only start in November due to prolonged monsoon.