USDA revises down India’s Sugar production forecast
Commodity Online | October 21 2019
UPDATED 11:08:02 IST

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Indias out-year centrifugal sugar production will decline for the second consecutive year to 29.3 million tonnes, which is 14.6 percent below the previous season, as per latest data compiled by United States Department of Agriculture (USDA).

This forecast includes 620,000 metric tons (MT) of khandsari (a local type of low-recovery sugar prepared by open-pan evaporation) and 28.7 MMT of mill sugar (equivalent to 26.8 MMT of crystal white sugar).

Additionally, as compared to the previous season (MY2018/19), a lower than expected diversion of cane for sugar production (due to limited cane availability in Maharashtra and Karnataka and pending cane arrears in Uttar Pradesh) and an expectation of a net reduction in the national average sugar recovery rate1 will moderate sugar output. However, successive benefits from the dedicated supply of cane juice/B-heavy molasses for fuel ethanol production will continue to incentivize sugar mills to divert excess sugar for fuel ethanol production, improve their cash flows , and settle pending arrears.

Uttar Pradesh (UP) will be the largest sugar producer in India but its output will not be enough to compensate for a straight 40 percent and 12 percent drop in sugar production in Maharashtra and Karnataka, respectively.

Combined, these three states will still contribute 80 percent of total sugar production in the out-year.

In addition, USDA has revised India’s sugar production in MY2018/19 to 34.3 MMT, up 3.7 percent above its prior assessment (April 2019) to include slightly higher sugar output from Uttar Pradesh.