Sugar output to fall 19% this season
India’s sugar output will fall 19% this season due to poor crop yields in Karnataka, Maharashtra and Andhra Pradesh, a decline not steep enough to warrant imports yet, the apex industry grouping said in its revised estimates.
The Indian Sugar Mills Association (ISMA) said output in the 2016-17 season beginning October would be about 20.3 million tones, compared with 25.1 million tonnes in the earlier season. In January this year, ISMA had forecast production of 21.3 million tonnes.
"Considering the opening balance of 7.75 million tonne, and an estimated production of 20.3 million tonnes and consumption of 23.8-24 million tonnes, the closing balance in the current season would be 4-4.2 million tones,” ISMA said in a press statement. “This balance will be enough to meet the domestic requirement until almost end of November 2017."
India’s sugar production fell from a high of 28.3 million tonnes in 2013-14 to 25.1 million tonnes in 2015-16, and hit a seven-year low of 21.3 million tonnes in 2016-17 after two consecutive years of drought starting 2014. The South Asian nation is the world’s biggest aggregate consumer of the sweetener, and often imports the commodity when local output falls sharply to prevent prices from soaring.
ISMA said that current sugar prices have been stable for the last two weeks and hence there was no reason to supplement domestic availability. " Nevertheless, once the crushing period gets over in the latter part of April 2017, ISMA will again review the figures."
According to ISMA, mills in Maharashtra have almost closed their crushing operations except at 17 mills and, therefore, the state is expected to produce about 4. 2 million tonnes of sugar.
"Similarly, the mills in Karnataka have also closed their crushing operations, but considering that it will have a special season from July to September in South Karnataka, it is expected that the state will produce 2.13 million tones,” ISMA said.
Uttar Pradesh may have higher yields and good production.
The state has 107 sugar mills crushing sugarcane, a number greater than those crushing cane at the same period last year. Most mills are expected to run until the latter part of April 2017 and production could touch 8.5 million tonnes of sugar this season, said ISMA
According to the mills, sugar sales were substantially lower. "Instead of seeing an increase in the sales, the mills are witnessing a drop. In the meeting of ISMA yesterday, members from all the states reported that sugar offtake was dull and, therefore, the offtake in February and March is also on the lower side," said ISMA.
The state has 107 sugar mills crushing sugarcane, a number greater than those crushing cane at the same period last year. Most mills are expected to run until the latter part of April 2017 and production could touch 8.5 million tonnes of sugar this season, said ISMA.
Demonetization, drop in sugar purchase by bulk consumers, price elasticity affecting demand and anticipated lower demand by state governments could be the reasons for lower offtake, said ISMA. "Therefore, as compared to last year’s sugar offtake of 24.8 million tonnes, ISMA now expects that sugar sales this season will be between 23.8 and 24 million tonnes," it said.