Sugar Industry Likely To Witness Storage Crisis

Sugar mills in India likely to face a severe storage crisis and may have to leave the sweetener under the open sky due to large carryover stocks as well as the expected bumper production this year, a US government report warns. Quoting industry sources, the report said mills would be short of storage space from Jan-Feb next year. Total storage capacity available with the sugar industry is estimated at about 15 million tonnes while the ending stocks after the 2007-08 season is expected to be about 17 million tonnes. The carryover stocks from last season stood at 11.5 million tonnes while production in 2007-08 is likely to be 29.3 million tonnes against an expected domestic consumption of 21.5 million tonnes. Sugar prices are expected to be lower this year due to bumper supplies even as the domestic demand is estimated to go up by 7.5 per cent.Prices in recent months have stabilised, with current prices in major markets ranging between $332- 378 per tonne (Rs 15 per kg at the upper limit), which is 18-20 per cent less than the last year's level. Sugar prices in 2006-07 were on decline from the beginning of the season that runs through October to September. In June 2007, sugar prices reached lowest in the season.