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Fresh Produce

World’s Second-Largest Sugar Crop To Drop On Rainfall Shortage

Sugar production in India, the second- biggest grower, will probably drop this season after below-normal rainfall cut yields in the nation’s top growing regions.

Supply will fall 8 per cent to 26 million metric tonnes in the 12 months through September from a year earlier, the Indian Sugar Mills Association said in an e-mailed statement Friday. The group had estimated production at 27 million tonnes in September and 28 million tonnes in July.

It’s been three decades since the country last had two years of less-than-normal rainfall. A smaller harvest may reduce Indian exports and help draw down inventories amassed from five years of global surpluses. Overseas shipments may total 2 million tonnes during the year, according to Narendra Murkumbi, managing director of Shree Renuka Sugar Ltd. That compares with the government’s target of 4 million tonnes.

Sugar prices in New York posted the first annual gain in five years in 2015 after the El Nino weather pattern cut sucrose content in cane grown in Brazil, the world’s biggest supplier, while yields also declined in India and Thailand. Output in India will probably fall short of demand for the first time in six years, researcher SGS SA said in November.

Sugar output in Maharashtra, the nation’s top growing region, may total 8.7 million tons, down from 9 million tonnes estimated in September, the millers’ group said. In Karnataka, production may be 4.3 million tons, compared with a previous estimate of 4.9 million tonnes, it said.

In September, Prime Minister Narendra Modi’s government pushed mills to make mandatory exports of as much as 4 million tonnes of sugar in the 2015-16 season and offered a subsidy on exports. The shipments are meant to enable mills to clear money owed to the nation’s 50 million cane growers.

News by Bloomberg, edited by ESM. To subscribe to ESM: The European Supermarket Magazine, click here.

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