Spot sugar prices improved at the major cash markets on increased demand from bulk consumers and stockists amid a fall in supply. The govt.’s move to extend the sugar export subsidy for sugar mills till 2009 has given a reason to smile. India has exported 2.5 mln tons of sugar since April and is likely to sell 3 mln tons this year and almost half of it would be raws. Increasing demand from Bangladesh and Sri Lanka will help in easing India’s glut situation. Government has released 41 lakh tonnes of non-levy (free sale) sugar for the quarter January-March 2008. On the domestic front, the total production in the Oct-Sept crushing season has been lowered to around 27.5–28 mln tons as against 30 mln tons earlier. This comes as a relief to the sugar industry. World Sugar demand will outstrip production in 2008-09, leaving a 1.6 mln deficit as compared to earlier estimates of a surplus. Farmers would switch to more remunerative crops leading to a fall in sugarcane acreage. Sugar output may decline by 18% on year to 23.4 mln tons in 2008-09, as per Morgan Stanley forecast. Sugar prices are likely to rise further in the coming months but may take some more time to overcome the glut situation.
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