Sugar output in India, the world's second biggest producer, is likely to increase by 16- 20 per cent to 23.5-24.5 million tonnes in the 2017-18 marketing year beginning October on good monsoon, says a latest study by credit rating firm ICRA.
Much of the increase in sugar production is likely to come from Maharashtra and Uttar Pradesh, the country's top two producing states, it said.
As per the ICRA study, while North Karnataka is likely to benefit from monsoons, the mills in South Karnataka and Tamil Nadu may remain impacted by past trends of poor rainfall affecting sowing in past seasons.
However, even with this increase, production is likely to be matched with consumption, thus resulting in stable prices, it said.
"Any downside to sugar prices from the current levels is likely to be driven by the allowance of a further import of duty free sugar, which appears unlikely at this moment," ICRA Ratings Senior Vice President and Group Head Sabyasachi Majumdar said.
The low closing stock levels of sugar in the domestic market are likely to support sugar prices in the near term.
The sugar output for the current year is pegged at little over 21 million tonnes, while the consumption is about 24.5 million tonnes.
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