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India’s total sugar production, which reached a record 32.5 million tonnes in 2017-18, may drop to 31.5 million tonnes in the year to 1 October 2019. (Bloomberg)
India’s total sugar production, which reached a record 32.5 million tonnes in 2017-18, may drop to 31.5 million tonnes in the year to 1 October 2019. (Bloomberg)

Bleak outlook in India's No.2 sugar grower may cheer world market

  • Sugar production in Maharashtra may tumble to a three-year low as an unfavourable monsoon forecast may cut sugar cane cultivation
  • That may offer relief for Australia and Brazil, which complain that India’s gushing sugar exports and subsidies are suppressing prices

New Delhi: Sugar production in Maharashtra may tumble to a three-year low as dry weather in some parts of the country, which is blamed for a global glut, cuts plantings.

Sugar production in the state may total 8 million tonnes in the year from 1 October, a drop of at least 25% from a year earlier, said Sanjay Khatal, managing director of the Maharashtra State Co-operative Sugar Factories Federation Ltd. That would be the biggest fall since 2016-17 when production almost halved. This year’s output may exceed 10.7 million tonnes, he said.

The forecast comes as private weather forecaster Skymet Weather Services Pvt. predicts a drier-than-normal monsoon for India this year, potentially shriveling crops and cutting plantings. That may offer relief for producers such as Australia and Brazil, which have complained to the World Trade Organization that India’s gushing sugar exports and subsidies are suppressing global prices. Sugar futures, which have gained about 7% this year after dropping almost 40% in the previous two years, may find further support.

A prolonged dry weather in Maharashtra is affecting sugar cane planting, Khatal said. “Some farmers may shift to short-duration crops such as pulses," he said.

Lower Planting

The area under sugar cane, which will be harvested from October, may drop by 25% to 30% from a year earlier due to poor weather conditions, Khatal said, without giving details about the total area. An estimated 75 million tonnes of cane will likely be crushed in 2019-20, compared with about 100 million tonnes this year, he said.

India’s June-September monsoon, which delivers more than 70% of the country’s annual rainfall, is likely to be below normal this year as the El Nino weather pattern may impact rain, according to Skymet. Precipitation during the rainy season is forecast to be 93% of the long-term average of about 89cm.

Sugar production in Maharashtra during the current year totaled 10.62 million tonnes as of Monday, up from 10.3 million tonnes a year earlier, Khatal said. Mills crushed 94.5 million tonnes of cane as of 8 April, compared with 92.1 million tonnes a year earlier, he said.

India’s total sugar production, which reached a record 32.5 million tonnes in 2017-18, may drop to 31.5 million tonnes in the current year, and to 30 million tonnes in the year starting 1 October on dry weather and as more cane may be diverted to boost ethanol output, according to the National Federation of Cooperative Sugar Factories Ltd. Output could fall to 27-28 million tonnes in 2020-21, according to the federation.

Bloomberg's Nicholas Larkin contributed to this story.

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