Indian sugar output this season is likely to be 3 million tonnes below forecasts due to a late start to some crushing, perhaps stemming any further fall in already rock-bottom prices, a leading firm said on Friday.
Industry estimates put production at a record 30-32 million tonnes in the year to September 2008, which would have all but ensured even lower returns for struggling mills.
But with firms in key growing state Uttar Pradesh delaying crushing operations for a few weeks after the local government insisted they pay farmers more for cane than they were getting for sugar, output is set to fall.
Crushing older cane reduces the sugar yield. "We will produce only 28-29 million tonnes as the yield will be lower and also due to flooding in cane-producing eastern Uttar Pradesh," Nikhil Sawhney, vice-president of Triveni Engineering and Industries Ltd, told Reuters in an interview.
Traders say Indian sugar prices are ruling at around 1,350 rupees ($34.32) per tonne. "Late crushing in Uttar Pradesh will be a blessing in disguise," said Mukesh Kuwadia, secretary general of the Bombay Sugar Merchant Association.
But Sawhney said only a change in policy could turn around a sector hit by a glut of supplies and low prices. Mills have been trying to export sugar at zero profit as part of efforts to cut back stocks.
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