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India's Sugar Output Dips Amidst Heavy Rains
18 Feb
Summary
- Excessive rainfall significantly reduced cane yields across India's key sugar-producing states.
- India may export less than half of its allocated sugar quota due to lower production.
- Domestic sugar prices are rising, while global prices are supported near five-year lows.
India's sugar output is facing a downward revision, with forecasts now indicating lower production than previously estimated. Excessive rainfall across major producing states like Maharashtra, Karnataka, Uttar Pradesh, and Gujarat has led to significantly reduced cane yields. This development is expected to curtail India's sugar exports, potentially impacting global sugar prices. Internal estimates from trade houses suggest production for the 2025/26 marketing year could be between 28.5 and 29 million metric tons, a decrease from the Indian Sugar & Bio-Energy Manufacturers Association's forecast of 30.95 million tons.
Farmers have reported that heavy rainfall damaged root development and led to early crop maturity, resulting in lower-than-expected cane yields per acre. In Maharashtra, the top producing state, output is now projected at approximately 9.6 million tons, down from an earlier estimate of 10.8 million tons. Consequently, nearly half of the crushing mills in Maharashtra have already ceased operations due to cane shortages. This lower output, combined with an anticipated rise in seasonal demand, is likely to support domestic sugar prices.
Despite the government allowing an additional 500,000 tons of export, bringing the total quota to 2 million tons, actual shipments are expected to fall short. Mills are finding more incentive to sell in the domestic market due to higher prices. Traders anticipate Indian shipments may not exceed 700,000 tons, a stark contrast to the available export quota, thus providing a floor to global sugar prices.
