By Yoga Rusmana
Aug. 14 (Bloomberg) -- Sugar mills in Indonesia, Southeast Asia’s biggest buyer, may raise production of white sugar as much as 7 percent next year because of higher prices.
The nation may produce between 2.9 million and 3 million metric tons of the refined product in 2010 compared with an estimated 2.8 million tons for this year, said Colosewoko, senior adviser of the Indonesian Sugar Association.
White sugar futures in London’s Liffe Exchange jumped yesterday to the highest price since the contract started trading in 1983 on expectations an improving economic outlook may buoy demand amid a supply shortfall. Indonesia’s retail price has risen 31 percent this year, according to data from the Ministry of Trade.
“Surging local prices will encourage farmers to grow more sugar cane next year,” Colosewoko, who uses only one name, said in a telephone interview in Jakarta yesterday.
Indonesia may produce 36 million tons of sugar cane next year, up from this year’s target of 34.8 million tons, said Colosewoko. The area planted with the sweeteners may increase to 450,000 hectares (1.1 million acres) next year from 444,500 hectares, he said.
“The use of proper fertilizers and good irrigation systems will boost productivity and reduce the impact of dry weather should the El Nino occur,” Colosewoko said, adding yield is expected to rise 2 percent to 80 tons per hectare.
Mills had produced 43 percent of this year’s output target, or 1.2 million tons, until the end of July, he said.
Indonesia has 61 mills located in Java, Sumatra and Sulawesi islands. The crushing season runs from April until October. Sugar produced from farms is used for domestic household consumption. Industrial users must import refined sugar or buy from domestic processors.
To contact the reporters on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net.
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