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India is likely to produce 25 million tonnes (mt) of sugar in the season starting October, Indian Sugar Mills Association (Isma) estimated on Monday.

The trade body had pegged the country’s sugar output at 23.7 mt in July, which it has revised upwards by 5.5% as the cultivated area has increased and there was good rainfall.

“As per satellite images, availability of total sugarcane acreage for crushing in India in sugar season 2013-14 will be around 52.89 lakh hectare, which is almost 9% higher than the initial estimates of ministry of agriculture of 48.53 lakh hectare," Isma said in a statement.

Sugar output of India, the world’s biggest consumer and second largest producer after Brazil, stood at 25 mt in the current 2012-13 marketing year ending this month. The country’s production of the sweetener is seen higher than the demand for the fourth marketing year in a row.

“We see domestic sugar demand for 2013-14 sugar season at 23.5 mt, slightly higher than last year’s 23 mt. So the sugar production will be higher than the demand. The estimates have been revised upwards in keeping with the unprecedented rains that have revived the sugar output prospects, mainly in Maharashtra and north Karnataka," said Abinash Verma, the lobby group’s director general.

Sugar producing states are expected to show a mixed trend. Isma estimates Maharashtra will produce 7.7 mt of sugar, close to last year’s output of 8 mt. Uttar Pradesh is projected to produce 7.7 mt of sugar in the current sugar season.

“Karnataka’s sugar production is expected to remain at almost the same levels of last year i.e. around 3.4 mt, while major fall is only expected from Tamil Nadu, which may give 15% lower production of 1.64 mt, as compared to last year’s production of about 1.9 mt of sugar," Isma said.

“Sugar prices will not move much," Verma said. “They are already stable and I expect they will continue at the same levels."

At the start of the season in October last year, sugar prices rose 18.9%. In August, sugar prices fell by 4.2%.

Arvind Singhal, chairman, Technopak Advisors Pvt. Ltd, a retail consultancy firm said, “ I think the sugar prices will show a slightly downward bias. The production at this estimate is expected to be higher than the demand which I believe will be similar to that seen last year. India will have to find new markets for export of the surplus sugar which will be tough. The export price realization is also likely to be on the lower side than that of last year."

PTI contributed to this story.

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