Low cane output to hit sugar production

First advanced estimates by ISMA forecasts sugar output at 23.37 mnT, a marginal recovery from its June estimates of 23.26 mnT

Triggered by a sharp decline in cane output in Maharashtra and Karnataka, sugar production in India is likely to decline by 7 per cent in the crushing season 2016-17, the apex industry body Indian Sugar Mills Association (ISMA) forecast in its first advanced estimates on Wednesday.

Based on the satellite image captured during the second week of September of cane acreage, ISMA estimates India's sugar production at 23.37 million tonnes for the ensuring crushing season beginning October 1, 2016 against 25.1 million tonnes of the sweetener output reported in the previous year.

In July 2016, ISMA had released its preliminary estimates of sugar production for 2016-17 SS, based on the first survey of satellite mapping carried out in June 2016 with an initial sugar production estimate at 23.26 million tonnes.

 

"On the basis of the September 2016 satellite images, ISMA has estimated the total cane acreage at 49.99 lakh hectares, about 5 per cent less than 2015-16 SS on pan India basis," ISMA said in a release.

Following two years of consequent drought, Maharashtra will lose a quarter of its production to claim second position in terms of sugar production with 6.27 million tonnes for sugar season (SS) 2016-17 as compared with 8.41 million tonnes in the previous year.

Uttar Pradesh will claim the first position with 12 per cent increase in sugar production at 7.67 million tonnes for SS 2016-17 in comparison with 6.84 million tonnes during last year. 

Interestingly, ISMA's survey forecast 22 per cent decline in sugar output in Karnataka at 3.19 million tonnes for SS 2016-17 as against 4.07 million tonnes in SS 2015-16.

Sugar output is estimated to increase in Tamil Nadu by 12 per cent to 1.56 million tonnes this season as against 1.39 million tonnes in the previous sugar season.

Sugar sales during 2015-16 SS have been at lower as compared to 2014-15 SS. The main reason for the drop in sales is the fact that sugar sales in the previous season i.e., 2014-15 SS had already witnessed a very steep abnormal jump from the previous year.

Hence, there has been a correction this year. Till the end of August 2016, sugar mills have despatched 22.65 million tonnes, which was 23.7 million tonnes to end of August last year. ISMA is estimating a higher sugar sales of 2.3 - 2.4 million tonnes in September due to festival season and the pressure on some sugar mills to sell more sugar to achieve the stock levels of 37 per cent by end of September'16 as per government's direction, which usually is on an average of around 2.0-2.1 million tonnes. 

"Accordingly, it is expected that domestic sales till September end i.e. for the 2015-16 SS, may be around 25 - 25.1 million tonnes (as against 25.6 million tonnes last year). This will leave a closing balance of around 7.5 million tonnes as on September 30, 2016, which may be higher if 2.3- 2.4 million is not sold by sugar mills," the release said.

With carry over stock of 7.5 million tonnes from SS 2015-16 and expected sugar production of 23.4 million tonnes in SS 2016-17, there will be enough sugar available in SS 2016-17 to meet the domestic demand of about 25.6 million tonnes (considering a demand growth 2.5 per cent) in the next season. There will thus be carry forward stocks of around 5.2 million tonnes for SS 2017-18sugar season.