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India Sugar Output Seen Rebounding From 7-Year Low

Published on Nov 14 2017 3:20 PM in Supply Chain tagged: India / Sugar / sugar cane

India Sugar Output Seen Rebounding From 7-Year Low

Sugar production in India is set to bounce back from a seven-year low as the area planted to cane increases and rain boosts yields in the world’s top consumer.

Production may total 25.886 million metric tons in the crop year that began on Oct. 1, according to SGS SA, a researcher hired by Bloomberg to survey farmers during September and October in the main growing regions.

That would be the first increase in three years and the highest since 2014-15 when India produced 28.3 million tons, according to data compiled by Indian Sugar Mills Association, which sees the country’s output at 25.1 million tons.

Global Surplus

Increasing Indian supply will bolster expectations of a global surplus that’s seen prices tumble 22 percent this year. The end of quotas in the European Union is expected to mean a pickup in exports from the bloc, while production in Thailand is set to rise. India won’t need imports this year, according to the country’s second-biggest producer Balrampur Chini Mills Ltd.

“Whenever the two largest states -- Uttar Pradesh and Maharashtra -- have good weather, a large crop is assured,” Mark Oulton, global agricultural market research manager with SGS, said in an email. “The large crop will spill over into better prospects for next year as well by encouraging an increase in acreage and new plantings.”

A rise in soil moisture in India led farmers to expand sugar cane area 4.8 percent from a year earlier, according to SGS, which surveyed 858 farmers between Sept. 30 and Oct. 18 across six states, including top producers Uttar Pradesh and Maharashtra. The results have a 95 percent “confidence level” with a margin of error of 3.27 percent, SGS said.

Monsoon Season

This year’s monsoon slightly missed a normal rain forecast. Still total rainfall between June and September was 95 percent of the 50-year average of 89 centimeters (35 inches), according to the Indian Meteorological Department. This year’s monsoon brought normal or excess showers to 83 percent of the country, with the rest receiving insufficient rainfall.

Planting increased in five surveyed states, with only Andhra Pradesh reporting a decline, SGS said. National yields climbed 18 percent after good rain this year and as some farmers grew high-yielding varieties, it said.

Cane production is seen climbing 24 percent to 379.03 million tons in 2017-18. About 66.5 percent of the crop will be crushed, according to SGS, while the rest will be used for livestock feed, seeding and jaggery, a local sweetener. SGS used a sugar-extraction rate of 10.3 percent for each ton milled, an average of 15 years through 2014-15, reported by the country’s cooperative producers.

News by Bloomberg, edited by ESM. Click subscribe to sign up to ESM: The European Supermarket Magazine.

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