Sugar mills in Maharashtra to close early as rain hits cane supply

By Rajendra Jadhav

MUMBAI (Reuters) -Sugar mills in India's top producing state Maharashtra are set to stop cane crushing 45 to 60 days earlier than last year as heavy rain has curtailed sugar cane availability, a senior state government official told Reuters on Friday.

The western state of Maharashtra, which accounts for more than a third of the country's sugar output, could produce 12.8 million tonnes of sugar in the 2022/23 marketing year that began on Oct. 1, down from an earlier forecast of 13.8 million tonnes, Maharashtra's sugar commissioner Shekhar Gaikwad said.

Lower sugar output could prevent the world's second-biggest exporter from allowing additional exports, potentially supporting global prices and allowing rivals Brazil and Thailand to increase their shipments.

India has allowed sugar mills to export only 6.1 million tonnes of the sweetener in the current season and, out of that, mills have already contracted to export 5.7 million tonnes.

"Excessive rainfall curtailed sugar cane's vegetative growth. This year lower cane is available for crushing," Gaikwad said.

A few mills in the central part of the state could start winding down operations in 15 days, and by the end of April all except three or four mills could have stopped crushing, he said.

Sugar mills in Maharashtra were operational until mid-June in 2021/22 as they were struggling to harvest a record crop.

Maharashtra, which often surprises the global sugar market with wide swings in production, has so far produced 6.76 million tonnes of sugar, slightly higher than the last year's 6.67 million tonnes.

LOWER EXPORTS

In 2021/22 Maharashtra produced a record 13.7 million tonnes, higher than the initial estimate of 11.2 million tonnes, allowing New Delhi to export a record 11.2 million tonnes.

But this year, sugar production in Maharashtra and neighbouring Karnataka was revised down and will not allow India to export additional sugar sought by the industry, a Mumbai-based dealer with a global trading firm said.

As the sugar exports quota was nearly exhausted, the Indian Sugar Mills Association and other trade bodies were requesting the government to allow additional exports of up to 4 million tonnes.

"Industry was banking on higher production in Maharashtra to convince government for higher exports. But instead of rising, Maharashtra's production is going down," the dealer said.

India mainly exports sugar to Indonesia, Bangladesh, Malaysia, Sudan, Somalia and the United Arab Emirates.

(Reporting by Rajendra Jadhav; Editing by Jan Harvey and Vin Shahrestani)