Sugar Output in India to Rise First Time in Three Years on Yield

Jul 11, 2014 7:33 am ET

July 11 (Bloomberg) -- Sugar harvest in India, the second- biggest producer, may increase for the first time in three years as higher yields counter a decline in area, a mills’ group said.

Production may increase 4 percent to 25.3 million metric tons in the harvesting season starting Oct. 1 from 24.3 million tons a year earlier, the Indian Sugar Mills Association said in an e-mailed statement today. That will be the first gain since 2011-2012 and compares with the median estimate of 25 million tons in a Bloomberg News survey published yesterday.

A bigger Indian harvest may ease a global deficit forecast by Czarnikow Group Ltd. and Kingsman S.A. Inventories at the start of new crop season will be 7.5 million tons in India, while demand may total 24.5 million tons in 2014-2015, the association said. Cane acreage is seen declining 2 percent to 5.23 million hectares (12.9 million acres), it said.

Farmers planted more cane in Maharashtra and Karnataka states, while seeding fell in Uttar Pradesh and Tamil Nadu, the association said. Higher sugar recovery and cane yield in Maharashtra and Karnataka may help increase production, it said.

The monsoon rains, which account for more than 70 percent of India’s annual showers, have been 43 percent less than a 50- year average since June 1 amid forecasts for an El Nino that’s previously caused droughts, according to the India Meteorological Department. Abundant dam waters may help cane survive the effects of a possible drought, according to Kotak Commodity Services Ltd.

“The impact of lower rainfall in June and, if any, in July, can be minimized as cane is grown on irrigated land and current water level in reservoirs is in good position,” the association said.

Dam Levels

More than 90 percent of the cane grown in India had access to irrigation at the end of 2010-2011 compared with about 58 percent for rice, according to the Agriculture Ministry. The nation’s 85 main dams held 38 billion cubic meters as of June 26, almost 102 percent of last year’s storage, according to the Central Water Commission.

Sugar output in Uttar Pradesh next season is seen below the 6.5 million tons harvested in 2013-2014, while it will expand from 7.7 million tons in Maharashtra, the association estimates. The harvest in Karnataka may jump from a record 4.15 million tons, it said.