India anticipates 8% drop in sugar production

India is expected to witness an 8% decline in sugar production to approximately 33.7 million metric tons during the 2023/24 marketing year, commencing on October 1. This decline is attributed to reduced rainfall in critical sugar-producing regions, which may negatively impact crop yields.

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According to a prominent trade association, India’s sugar production for the 2023/24 marketing year, starting on October 1, is likely to decrease by 8% to around 33.7 million metric tons. This dip is anticipated due to diminished rainfall in crucial sugar-producing states, which could negatively impact crop yields.

The world’s second-largest producer of sweetener might choose not to assign export quotas and could bolster global prices due to the anticipated decrease in sugar production, while global prices are already trading at multi-year highs.

“Sugar production for 2023/24 without considering diversion towards ethanol has been estimated at around 33.7 million tons, against 36.6 tons estimated for 2022/23,” the Indian Sugar Mills Association (ISMA) said in a statement.

In August, ISMA had initially projected sugar production at 36.2 million tons for the current season. The trade organization hasn’t provided a specific estimate for the net sugar production after the allocation of sucrose for ethanol production. Nevertheless, they have mentioned that the overall sugar output will surpass the country’s annual consumption of 27.85 million tons.

The precise diversion of sugar toward ethanol production can only be determined once the government announces the annual ethanol procurement price, according to ISMA.

In the previous marketing year, sugar mills redirected 4.1 million tons of sugar for ethanol production, and a similar allocation in the new season could potentially reduce the output to 29.6 million tons, as noted by a Mumbai-based dealer associated with a global trade house.