Indonesia 2009 Sugar Output Seen Below Govt Forecast

Jakarta, Oct 27 - Indonesia's 2009 sugar output will match last year's 2.57 million tonnes, but fall short of the government's forecast for 2.7 million tonnes as erratic weather cut the sugar content in cane, an official said on Tuesday.

This year's output will also be well below the association's earlier forecast of 2.8 million tonnes, Colosewoko, an official at Indonesian Sugar Association (AGI), told Reuters in an interview.

"We still have two more months of crushing but unless there is a miracle, sugar content for the whole year will likely fall," Colosewoko said.

The government revised its forecast to 2.7 million tonnes just last week.

Colosewoko said that the change in weather from wet to dry was too fast, which is not a favourable condition for cane to produce sucrose.

"If you think of cane output of 33 million tonnes (estimated for this year), a small decline in sugar content means a lot," said Adig Suwandi, another official at the association and corporate secretary of sugar producer PT Perkebunan Nusantara XI (PTPN XI).

As of end-September, sugar output reached 1.91 million tonnes, while sugar content in cane dropped to 7.57 percent, from 7.97 percent a year ago.

MISSED TARGET

The sugar crushing season starts in May and lasts until November, with a few mills finishing crushing in December.

Suwandi said most sugar firms will likely miss the output target. In the case of PTPN XI, the firm may produce 400,000 tonnes of sugar this year, or 30,000 tonnes below the initial target.

To cover the shortfall, the government has allowed state firms to import 180,000 tonnes of raw sugar, but some firms have cancelled the import plans because of difficulties securing deals.

Colosewoko said there was no need for concern if state firms were unable to import now because additional supplies from imports would only be needed to cover demand in March or April.

Indonesia is scaling back imports of white sugar for direct consumption after an increase in domestic output in recent years but sugar prices tend to track global prices.

Sugar prices at retail level have eased to below 10,000 rupiah ($1.05) per kg, from above 11,000 rupiah per kg ahead of peak demand season during last month's Eid al-Fitr festival.

The price fall followed a drop in London December white sugar, which stood at $577.7 per tonne on Tuesday, or 6.6 percent lower than its record high of $618.4 set on Sept. 30.

Source : Reuters