USDA revises down India’s sugar production forecast for marketing year 2019

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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, according to the 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.

Combined, these three states will still contribute 80 per cent of total sugar production in the year. In addition, USDA has revised India’s sugar production in MY2018/19 to 34.3 million tonnes, up 3.7 per cent above its prior assessment (April 2019) to include slightly higher sugar output from Uttar Pradesh.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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