Drought, pests set to cut India's sugar output by almost 3 million tons

Persistent dry weather and pest attacks are set to cut India’s sugar output from a record this year even after farmers in the world’s second-largest producer increased plantings.

Production may total 28.9 million metric tons in the year that began Oct. 1, according to SGS SA, a researcher hired by Bloomberg to survey farmers during September and October in the main growing regions. That compares with the reduced estimate of 32 million tons made last month by the Indian Sugar Mills Association. The National Federation of Cooperative Sugar Factories Ltd. forecast production at 32.4 million tons.

“Sugarcane, with its lush vegetative growth, is very susceptible to drought and the Indian crop suffered from this in 2018 along with attacks of white grub in the key producing state of Maharashtra,” Mark Oulton, global agricultural market research manager with SGS, said in an email. “This will more than offset the overall 7 per cent increase in acreage.”

A smaller harvest than expected by the industry bodies may reduce exports from India, giving some support to prices that have fallen about 6 per cent from their recent peak last month. Crop downgrades in India will force the global sugar market into a deficit for the 2018-19 season, according to Marex Spectron. Still, record production last year means the government is planning measures to help mills export as much as 5 million tons in 2018-19.

Sugarcane planting increased in five surveyed states, with only Tamil Nadu reporting a decline, SGS said. National yields likely dropped about 10 per cent due to erratic rain across the country as well as white grub infestation in some areas of Maharashtra and Karnataka.

Cane Production

SGS surveyed 863 farmers between Sept. 27 and Oct. 20 across six states, including top producers Uttar Pradesh and Maharashtra. The results have a 95 per cent “confidence level” with a margin of error of about 4.3 per cent.

Cane production is seen declining 3.8 per cent to 362.5 million tons. About 70 per cent of the crop will be crushed, according to the survey, while the rest will be used for livestock feed, seeding and jaggery, a local sweetener. SGS used a sugar-extraction rate of 11 per cent for each ton milled, it said citing data from Indian Sugar Mills Association.

Highlights from the survey:

About 35 per cent of the overall crop is in good condition, down from 52 per cent a year earlier.
About 21 per cent are in bad condition, up from 3 per cent in 2017 survey.
Remaining crops are normal.

Sugarcane yields will likely drop 14 per cent in Uttar Pradesh and 9.3 per cent in Maharashtra.

Declines will be bigger in smaller producers, with Andhra Pradesh seen falling 15.6 per cent and Tamil Nadu down 18.2 per cent.

Harvest will drop 8.3 per cent in top producer Uttar Pradesh and 25.7 per cent in Tamil Nadu, SGS said.

It will climb 11.9 percent in Gujarat, 8.8 percent in Karnataka and 0.3 percent in Maharashtra.

This year’s monsoon in India was below average, with total rainfall between June and September 91 per cent of the 50-year average of 89 centimeters (35 inches), according to the Indian Meteorological Department.

Farmers surveyed expect cane prices to increase by 8.5 per cent to 19 per cent, according to SGS. Mills buy cane at rates set by the federal as well as state governments.

Last year, SGS predicted India’s production at 25.886 million tons for 2017-18, less than the final tally of 32.5 million tons estimated by the Indian Sugar Mills Association.

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