S & P Global Platts reduces India's sugar production estimates to 25.1 million mt

KOLKATA: S & P Global Platts has reduced India's sugar production estimates between October 2015 - September 2016 from 25.6 million mt to 25.1 million mt. The reduction in estimates mainly stems from a sharp fall in output recently, made more evident by ISMA’s latest production update on April 30.

There are major reductions in our estimates for two key states -- Uttar Pradesh and Karnataka -- where they were reduced to 6.9 million mt from 7.2 million mt, and 4.1 million mt from 4.2 million mt. Based on ISMA’s update, overall sugar production in the country till end-April in the 2015-16 crop year, was 24.6 million mt, down 11% from a year earlier.

In the report titled Kingsman Sugar Supply & Demand update of S&P Global Platts it has been said that production across the country is almost complete for this crop year with only 48 mills continuing with crushing operations currently, compared with 97 a year ago. Of these mills, 35 are in Tamil Nadu, while the rest are in Maharashtra, Karnataka and Haryana. Only one mill is still operating in Uttar Pradesh.

Production in the key state of Maharashtra stood at 8.4 million mt for the 2015-2016 season till end-April, compared to 10.3 million mt a year ago. In the case of UP, the second largest sugar producing state, output for the same period was 6.8 million mt, compared to 7 million mt a year ago. In light of the fast pace of closure of mills across India, given low cane availability on account of dry weather in the 2015-2016 season, ISMA revised its production estimate to just above 25 million mt from 25.7 million mt.

In the case of UP, where a reduction of 300,000 mt in sugar production levels to 6.9 million mt is expected, we see a 3% reduction in average agricultural yields in the state at 51.2 mt/ha, which has resulted in overall cane availability going down by 7.4% to 70 million mt with sucrose recoveries of 9.8%.