New Delhi: Sugar output in India, which vies with Brazil as the world’s top grower, will likely drop to a three-year low next season as dry weather in some main areas of the western region cuts planting.
Production may slide to less than 30 million metric tons in the year that begins on Oct. 1 from an estimated 31.5 million tons this season, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd. India produced a record 32.5 million tons in 2017-18, according to the Indian Sugar Mills Association.
A shrinking harvest will potentially cut overseas shipments and support global prices that fell 21 percent in 2018 — a second straight year of losses — on concerns over a supply glut. India swings between being a sugar importer and exporter, depending on the size of local output.
“A drought in some parts of Maharashtra discouraged planting,” Naiknavare said in an interview by phone on Monday. “Looking at the pace of planting, it seems that the area under sugar cane will go down.” Some areas in the southern state of Karnataka, the country’s third-biggest grower, also suffer from drought, he said.
Sugar exports may total 2.5 million to 3 million tons in the year ending Sept. 30 compared with a government target of 5 million tons, Naiknavare said. “The export window will close before Brazil’s new crop reaches the market” in March-April, he said. An increase in the minimum sale price of sugar will also slow down exports, Naiknavare said. -Bloomberg
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It may be time to plan a gradual shift away from sugarcane cultivation, keeping in mind the growing scarcity of water in states like Maharashtra. The sugar industry is financially stressed. More health consciousness all over the world means global demand for sugar will also level off.