Sugar Harvest in Pakistan Seen Climbing to Record on Planting

(Bloomberg) – Sugar production in Pakistan, Asia’s fourth-largest producer, may jump as much as 20 percent to a record next year as higher state-set cane prices spur farmers to boost planting, potentially increasing exports.

Output may expand to 6 million metric tons in the marketing year starting Nov. 1 from 5 million tons this year, said Shunaid Qureshi, chairman of the Pakistan Sugar Mills Association. That may boost surplus for exports, he said.

Futures tumbled to the lowest since July 2010 in New York on June 4 on signs the harvest is accelerating in Brazil, the world’s largest grower. Production globally will be 10 million tons more than than consumption in 2012-2013, boosting a glut, according to the London-based International Sugar Organization.

“The growers are getting good prices for their sugar cane,” Qureshi said in an interview. “There is a chance that the government might increase cane prices in the coming crushing season” from an all-time high 172 rupees ($1.73) per 40 kilograms in the 2012-2013 season, he said.

The area under cane may increase about 10 percent from 1.7 million hectares (4.2 million acres) in 2012-2013 and yields may climb because of good monsoon rainfall, he said.

A bigger harvest may leave about 1 million tons for exports after setting aside 4.5 million tons for domestic consumption and 500,000 tons as government reserves, Qureshi said.

The country exports mainly to the Middle East, the Far East and Africa, he said. Shipments totaled 900,000 tons since May 2012 and mills are planning to ship a further 300,000 tons before the next harvest, he said on June 27.

Raw sugar for October delivery fell 1.4 percent to settle at 16.69 cents a pound on ICE Futures U.S. in New York yesterday, capping the longest decline since June 4. Futures are down 14 percent this year, set for a third straight annual decline, the longest losing streak since 1992.