Sugar output in India's top cane producing state of Uttar Pradesh may be 9-12 percent below previous estimates after floods ravaged plantations but higher supply from western India may offset the loss, government and trade officials said. Uttar Pradesh, which accounts for a quarter of India's output, is expected to produce 6.0-6.2 million tonnes in the next season beginning in October.
This is still above this season's 5.8 million tonnes, and the country remains on track to export sugar. The state government had initially forecast output of 6.8 million tonnes. "We estimate 6.0-6.2 million tonnes of sugar output in 2010/11," B.S. Bisht, Uttar Pradesh government spokesman, told Reuters. At least 2 million people in northern India, including Uttar Pradesh, have been left homeless as the Ganges and other rivers, swollen by heavy monsoon rains, broke embankments and submerged villages and fields.
The weather office says the monsoon, which usually starts withdrawing from northern and western India in early September, is unlikely to abate this week and heavy showers are expected in the western, cane-growing parts of Uttar Pradesh.
Rainfall in this region was six times the average on Tuesday, weather office data showed, potentially exposing crops to further damage. "The real estimate of damage will be done only when the flood water recedes," Bisht added. State officials said 500,000 hectares of agriculture land in Uttar Pradesh were flooded and the heavy rains could also affect cotton output from Punjab and Haryana states.
Expectations so far are still for a record 35 million bales of cotton to be produced this year. India is the world's second-largest producer of sugar after Brazil, and is also the biggest consumer of the sweetener. Its massive imports in the current season, after a severe drought last year was responsible for damaging crops, were a key factor that drove New York raw sugar futures to a 29-year high in February.
India could export up to 3.5 million tonnes of sugar in the new season that begins in October, Prakash Naiknavare, managing director of Maharashtra State Co-operative Sugar Factories Federation told Reuters on Monday. M.N. Rao, deputy director general of the Indian Sugar Mills Association, said on Wednesday exports were unlikely to be hit as mills had adequate stocks to meet local and overseas demand.
Avtar Sandu, manager of Asian Commodities at Phillip Futures in Singapore said there were no signs of changes in the country's export plans despite floods. "My feeling is that it may not change the scenario. There's a lot of sugar somewhere lying in the warehouses," he said.
India's top sugar maker Bajaj Hindusthan Ltd has permission to re-export 200,000 tonnes of raw sugar and trade sources say India could allow re-export of 150,000 tonnes of white sugar by the end of December. "As long as the export licences are there, I think the international prices will not be affected," Sandu said. S.L. Gupta, secretary of the Uttar Pradesh Sugar Mills Association, said sugar crushing in the state may be delayed. On Wednesday, Indian spot prices remained steady as dealers still expected higher output from sugar producing states including country leader Maharashtra.