Sugar production estimates cut on drought in key growing states

With drought hitting the crop in key growing states of Maharashtra and Karnataka, the Indian Sugar Mills' Association (ISMA) has revised downwards its estimates for sugar production during the 2016-17 seasons (October-September) to 213 lakh tonnes.

ISMA projected sugar production at 234 lakh tonnes for 2016-17 during its first advance estimates of the crop in September last year.

The association said, "Considering that some sugar mills have closed their operations in the drought affected areas mostly in Maharashtra and Karnataka and field reports that sugarcane availability in these two states is lower than earlier expectations, ISMA decided to revise its estimates of sugar production for 2016-17 sugar seasons."

Sugar recoveries and yields have also gone down in parts of Maharashtra and Karnataka. Sugar production in the current season (till January 15) has been pegged at 104.8 lakh tonnes, around 5 percent lower than the same period the previous year. ISMA, however, said that there would neither be any shortage of sugar nor any need to import sugar.

It also said, "There is enough sugar to meet the domestic requirement and yet leave a healthy balance for the next sugar season."

Despite the decline in production, a high opening balance of 77.5 lakh tonnes in the 2015-16 season would enable the sugar industry to end the season with a closing stock of 48.5 lakh tonnes, which is equivalent to at least 2 and a half months of sugar consumption.

ISMA said, "Now that sugar mills, in the drought affected areas, have started closing down, the difference (in sugar sales) from last year will be higher as the season progresses."

Sugar sales during the first quarter of the 2016-17 season (October-December 2016) has declined 8.5 percent year-on-year (y-o-y) or by 5.5 lakh tonnes. Total sales by mills were pegged at 248.5 lakh tonnes in the 2015-16 seasons.

As per the field reports, it is certain that sales during the 2016-17 season will be lower than that of last season, ISMA said. Sales in January are also projected to be lower compared to last year when sugar mills had sold 25 lakh tonnes.

ISMA said, "Assuming that in the balance eight months of the current season i.e. from February to September, there is a similar sugar sale in comparison to last year and assuming that the sugar sales/dispatches are similar to last year, sugar sales in the current season will be around 242 lakh tonnes."