Cane crush delay in Uttar Pradesh to hit supply

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Delay in sugarcane crushing in India's biggest cane producing state threatens to aggravate sugar shortage, increasing the country's dependence on expensive imports.

Farmers from Uttar Pradesh (UP) state in northern India, which produces almost half of the country's cane, have been on warpath for about three weeks to press for higher prices, forcing Prime Minister Manmohan Singh to consider changes in fixing cane prices.

The severe protest has hampered crushing in the state raising fears of more imports by India, a major factor in helping global sugar prices double this year.

"The delay of almost six weeks has tightened supplies further. Everyone was depending on UP mills to start on time to tide over the situation," Yatin Wadhwana, head of Sucden India, told Reuters.

India, the world's top consumer and the biggest producer behind Brazil, has placed an import order of a record 5 million tonnes of raws, pushing New York-traded raw sugar to 28-1/2-year highs.

ICE benchmark March raw sugar futures on Thursday fell 0.56 cent to settle at 22.74 cents per lb on investor sale caused in part by a rebounding dollar.

Traders say indications of lower output and a delay in crushing would put further upward pressure on global prices.

"Had mills been crushing in UP for six weeks now, supplies would have improved by at least 150,000 tonnes. When stocks are low, any delay adds to shortage," Wadhwana said.

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