LONDON, April 8: Asian sugar output is set to grow in 2006-07 as farmers seek to reap benefits from high prices, sugar merchant Czarnikow said. One of the trends that has become apparent since the start of the year is that with sugar prices trading between 15-20 cents a lb, sugar producers around the world will be looking for opportunities to expand, Czarnikow said in its latest monthly report released late on Thursday.

Those producers that have had to cut back marginal production during periods of low prices will be the first to respond, it said.

And at this time of year, the producers best placed to respond are those cane industries located in Asia.

In the past 20 years, Asia had been the key region driving the growth in global sugar consumption.

Asia’s economic development and the rise of the tiger economies have seen a change in sugar consumption patterns linked to rising affluence and urbanisation, Czarnikow said.

One of the consequences of the price spike that took place at the start of this year is that some sugar producers have now sensed an opportunity to expand.

It seemed likely that during the next few years production would grow within importing countries, Czarnikow said.

And in the short term, the biggest immediate change will come from the recovery in Asian sugar production as many of the region’s sugar industries are processing sugar at levels below their production peaks and are well placed to expand.

Czarnikow expected a recovery in production in India, the world’s largest consumer.

The downturn in the Indian production cycle, which began in 2003/04, is without question one of the main reasons behind the bull run that we have seen in the sugar market, it said.

But rising prices had started to make a difference.

Strong domestic sugar prices during 2004/05 resulted in an increase in plantings for 2005/06, Czanikow said.

As a result this season’s crop is expected to come in at around 18.0-18.5 million tons — a recovery of around five million tons.

It added: “The recovery in Indian sugar production and expectations of continued growth have encouraged both the industry and government to push exports.

Production was also forecast to recover in Thailand in 2006/07.

Even though the 2006/07 season is still almost a year away, the industry is looking forward to increased production as high cane prices have encouraged farmers to increase planted area.—Reuters