Czarnikow sees lower RI sugar output in 1995

Czarnikow sees lower RI sugar output in 1995

LONDON (Reuter): Indonesia's 1995 sugar production should fall to around 2.30 million tons of sugar from 2.46 million last year due to the effects of a severe drought, trade house C.Czarnikow said in its latest report.

This would imply a statistical shortfall of some 700,000 tons after consumption was discounted, Czarnikow said.

"Due to the severe drought experienced in Indonesia earlier in the year, production estimates for 1995 are seen to be slipping back to somewhere in the region of 2.30 million tons, relative to the 2.46 million during 1994," the report said.

It estimated 1995 consumption at around three million tons.

"However, considerable efforts appear to have been made by authorities in addressing the supply shortfall, as some 300,000 tons of imports are widely reported to have been contracted."

Last month the Indonesian state commodities regulator said 1995 sugar output was expected to total 2.438 million tons.

The Indonesia Sugar Association has forecast 2.22 million tons but admitted this was based on data available at end-August.

Meanwhile, the London-based International Sugar Organization (ISO), worried over rising world sugar output, has warned producing countries against consequences of oversupply, its top officials said.

"I'm a little bit worried, if you look into plans everybody has," ISO executive director Peter Baron told Reuters in an interview.

Sugar conference

Baron was in Delhi to attend a three-day international conference on sugar.

"India wants to become the biggest producer, the Thais are showing figures which are phenomenal. Indonesia will improve, Cuba will increase again, the Australians are under long-term expansion plans," he said.

ISO officials estimated 1995/96 (October/September) world production at 119.5 million tons and consumption at 117 million tons, leaving a surplus of 2.5 million tons.

"There is still a lot of consumption potential in developing countries but...their purchasing power is limited," Baron said.

ISO officials expect sugar prices to come under pressure in the first quarter of calendar 1996 because of over-supply.

"I think countries will have to think where to sell their sugar in four to five years and what kind of markets they envisage," Baron said.

He said import markets were not expanding at the same pace as production.

"Do countries, when they expand their capacities, take into consideration what could happen in three or four years if everybody increases production," Baron said.

"We give them warnings. It is not in the interests of exporters and it is not in the interests of importers. Volatility of markets is harmful to both sides," he said.