USDA revises down India’s sugar production forecast

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

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

Additionally, as compared to the previous season (Marketing Year 2018/19), 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 rate 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 per cent and 12 per cent drop in sugar production in Maharashtra and Karnataka, respectively.

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