Sugar output reaches 8 mln tn in Oct-Dec; demand drops

The country's sugar production has touched 8.09 million tonnes in October-December while demand remained low due to demonetisation, the Indian Sugar Mills Association (ISMA) said today.
Around 462 mills produced 8.09 million tonnes of sugar in the October-December period -- the first quarter of 2016-17 sugar marketing year -- as against 8.05 million tonnes by 481 mills in the same quarter of last sugar year.
Overall sugar production of India, the world's second largest producer and biggest consumer, is pegged at 22.5 million tonnes in 2016-17 sugar year (October- September), lower than 25.1 million tonnes in the last sugar year.

There was a "big fall in sugar offtake" in the first quarter of 2016-17 marketing year due to currency crunch post demonetisation, ISMA said.
"There has been a demand destruction of almost five lakh tonnes of sugar. The offtake in October-December 2016-17, has therefore been significantly lower than last year."
As per ISMA data, sugar production in Uttar Pradesh, the country's second biggest producer, increased to 2.74 million tonnes from 1.79 million tonnes in the said period.

However, sugar output in Maharashtra, the country's leading producer, declined to 2.52 million tonnes in the period under review from 3.37 million tonnes in the year-ago quarter. Karnataka too witnessed a fall in sugar output to 1.56 million tonnes in October-December from 1.59 million tonnes in the year-ago period.

In Maharashtra, 147 sugar mills commenced crushing operations, while 25 of them have stopped now. These mills are mostly in the drought-affected areas of Marathwada, Sholapur and Ahmednagar, ISMA said in a statement.
Mills in Kolhapur, Sangli, Satara and Pune, which were not as adversely impacted by drought, are crushing at almost similar levels like last year's. The mills in these four regions generally contribute almost 55-60 per cent of the state's production.
Sugar output in Gujarat was lower at 3,50,000 tonnes in the first three months of this year as against 4,61,000 tonnes in the year-ago.
Production in Bihar was 1,50,000 tonnes, Tamil Nadu at 1,25,000 tonnes and Andhra Pradesh/Telangana at 1,80,000 tonnes in the said period.

On sugar prices, ISMA said that ex-mill rates have started improving and rates are just enough to cover the cost of production.
The cost of production of sugar is estimated to be around Rs 35-36 per kg this year, which is higher by Rs 2 per kg in the last year, it added.