India's sugar production is likely to rise to a record 29.2 million tonnes in the 2017/18 season, up nearly 12 percent from a previous estimate as Maharashtra state's output could more than double, according to a survey of global and local dealers. The higher-than-expected output could pressure local prices and force the world's second-biggest sugar producer to remove a tax on exports to encourage overseas sales.
Indian Sugar Mills Association (ISMA) had in January forecast production of 26.1 million tonnes for the marketing season that started on October 1. "The upward revision in Maharashtra's output number changed the overall number for the country," said a Mumbai-based dealer with a global trading house. The western state is likely to produce 10.2 million tonnes of sugar, up from a government forecast of 7.3 million tonnes, as cane yield was far better than expected, according to the seven trading house dealers participating in the survey.
India produced 20.3 million tonnes of sugar in the 2016/17 marketing year ended on September 30, including 4.2 million tonnes from Maharashtra. The government has until now been framing policy in anticipation of production being around consumption levels of 26 million tonnes, said a New Delhi-based sugar dealer. "The government should realise we will have a significant surplus. Unless government promotes exports, local prices won't recover," the New Delhi dealer said.
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