The Indian Sugar Mills Association (ISMA) has revised lower the country’s production of the commodity to 34 million tonnes (mt) for the current season (October 2022-September 2023) as the sugarcane crop has been affected by excess rains mainly in Maharashtra and Karnataka.
The estimate by ISMA, an association of private sugar mills, is five per cent lower than 35.8 mt produced last season and its initial estimate of a record 36.5 mt production made in October.
The sugar production is after taking into consideration the likely diversion of 4.5 mt of sugar output for the manufacture of ethanol.
According to ISMA data, production in Uttar Pradesh is projected to be 10.1 mt (10.2 mt last season). This is in view of a higher 1.6 mt (1.2 mt) diversion for ethanol production.
Maharashtra will retain its position as the top sugar producer this season, too, though its output will be nearly 19 per cent lower than last season at 12.1 mt (14.8 mt). However, diversion for ethanol is expected to be up at 1.5 mt (1.1 mt).
Output till Jan 15
Karnataka, the third highest producer, will produce 5.6 mt (6 mt) of sugar with an additional 1.1 mt (0.75 mt) being diverted for ethanol. Output in Tamil Nadu is projected at 1.6 mt (1.3 mt), while in Gujarat it is expected to remain unchanged at 1.2 mt.
ISMA said in a statement that the revised estimate, pegging the production 7 per cent lower than its initial estimate made in October l is based on the images of harvested and balance areas. Field visits, the current trend of yields and sugar recoveries achieved till now, as also expected yield/sugar recovery in the balance period of the sugar season, helped in arriving at the current estimate.
According to ISMA data, sugar production until January 15 in the current season was 15.68 mt against 15.08 mt a year ago.
Earlier this month, the All India Sugar Traders Association (AISTA) estimated the production at 34.5 mt after taking into account the damage due to excess rains across the country.
Releasing its production estimate for the current season, AISTA said on January 6 that its projections had taken into account weather-related issues that cropped up after October.
“Last year, rains helped improve sugarcane yield. This year, however, farmers are complaining that lack of sunlight after heavy rainfall has affected yield,” said Rahil Shaikh, Managing Director, MEIR Commodities India Pvt Ltd.
“Yields are staying low so there will not be a recovery, and now there are signs that some mills in Maharashtra are simply running out of cane early…,” London-based diversified global financial services platform Marex said.
Stating that there was supply deficit in the global market, Marex said the crop in India, Thailand, EU and Brazil had to be “on target”. “But in fact 2 of them, India and EU, are already looking very shaky,” it said, adding that rumblings are now heard about Thailand.
India will likely not export above the 6 mt quota fixed by the Centre the London-based group said. Industry sources said exports are likely to drop 45 per cent this year to 6.1 mt.
Premium for export
While allowing exports of 6 mt for the current season, the Centre gave time to exporters till May 31 to ship out the contracted volume.
“The export quota has almost been exhausted,” said Shaikh.
Concerns over production and supply deficit have resulted in raw sugar prices surging by 8 per cent in the past week to over 21 cents a pound (₹38,225/tonne) on InterContinental Exchange (ICE), New York. White sugar in London is quoted at $572.40 a tonne.
“Sugar for export is sold at a premium of ₹7 a kg to the domestic market,” said Shaikh.
Marex said funds could buy sugar “like crazy” with 1.59 lakh lots being already purchased, hinting that the headroom for further rise may be less.
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