New Delhi: Sugar production in India, the second- biggest grower, will probably drop this season after below- normal rainfall cut yields in the nation’s top growing regions.

Supply will fall 8% to 2.6 crore metric tons in the 12 months through September from a year earlier, the Indian Sugar Mills Association said in an e-mailed statement on Friday. The group had estimated production at 2.7 crore tons in September and 2.8 crore tons in July.

It’s been three decades since the country last had two years of less-than-normal rainfall. A smaller harvest may reduce Indian exports and help draw down inventories amassed from five years of global surpluses. Overseas shipments may total 20 lakh tons during the year, according to Narendra Murkumbi, managing director of Shree Renuka Sugar Ltd. That compares with the government’s target of 40 lakh tons.

Sugar prices in New York posted the first annual gain in five years in 2015 after the El Nino weather pattern cut sucrose content in cane grown in Brazil, the world’s biggest supplier, while yields also declined in India and Thailand. Output in India will probably fall short of demand for the first time in six years, researcher SGS SA said in November.

Sugar output in Maharashtra, the nation’s top growing region, may total 87 lakh tons, down from 90 lakh tons estimated in September, the millers’ group said. In Karnataka, production may be 43 lakh tons, compared with a previous estimate of 49 lakh tons, it said.

In September, Prime Minister Narendra Modi’s government pushed mills to make mandatory exports of as much as 40 lakh tons of sugar in the 2015-16 season and offered a subsidy on exports. The shipments are meant to enable mills to clear money owed to the nation’s 5 crore cane growers. Bloomberg

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