India's sugar production estimate revised upwards to 26.5 million tonnes

Indian Sugar Mills Association, the apex body of sugar producing companies, on Tuesday upgraded marginally its sugar production estimate for the October 2019-September 2020 sugar season.

Based on a study of satellite images of cane area in the last week of January 2020, ISMA said at its meeting held on Tuesday that sugar production would be 26.5 million tonnes.

These are satellite images of harvested and balance area, trend of yields and sugar recoveries achieved till now, as also expected yield/sugar recovery in the balance period of the sugar season. “There was an agreement that sugar production during 2019-20 would be slightly more at 26.5 million tonnes than the 26 million tonnes estimated by ISMA in November 2019,” it said in a release.

The estimate is made after considering a reduction in sugar output due to more production of ethanol by way of diversion of heavy molasses and sugarcane juice.

Mills in UP are expected to produce a total of about 11.8 million tonnes, similar to the previous year. The bigger fall will be in Maharashtra, where production is estimated at about 6.2 million tonnes, against 10.72 million tonnes produced in 2018-19.

The third major sugar-producing state, Karnataka, is expected to produce about 3.3 million tonnes, against 4.43 million tonnes in 2018-19.

ISMA has estimated sugar exports this season at 5 million tonnees. Yesterday, it cancelled part of the quota allocated to mills, saying they failed to export according to the quota given to them. However, this is seen as a good move in promoting overall exports because these quotas have been reallocated to those mills that have been able to use their quota. But some quarters see red in the way quotas have been cancelled. According to them, the earlier circular was vague in terms of timeline given to complete exports. “Had that been categorically mentioned they would have hastened the export process,” said an industry source.

“According to the letter of intent for ethanol supply in 2019-20, contracts for supply of ethanol during 2019-20 made from heavy molasses and sugarcane juice, is 616.3 million litres and 106 million litres, respectively. Another tender is under finalisation and it is expected that some more ethanol supplies would be contracted, including ethanol from heavy molasses and sugarcane juice,” ISMA stated.

With an opening stock of 14.5 million tonnes on October 1, 2019, domestic consumption of 26 million tonnes, sugar exports of over 5 million tonnes and an estimated production of 26.5 million tonnes, the closing stocks as on September 30, 2020, is expected to be lower at around 10 million tonnes.

“If the government continues with its buffer stocks of 4 million tponnes next year, too, the net available sugar balance for market sale will be around 6 million tonnes, which is considered reasonable,” said ISMA.