India's sugar output set to drop 7%, could crimp exports

Lower sugar exports from India, also the world's second biggest exporter, could lift global prices SBc1 LSUc1 and allow rivals Brazil and Thailand to increase their shipments.

"The crop was just looking like last year but when we started harvesting we realised that yields were very low," said Pradip Jagtap, a farmer from the Solapur district of the western state of Maharashtra, India's No.1 sugar-producing state.

This year, Jagtap could gather 530 tonnes of cane from his nine-acre plot, down from the previous year's 750 tonnes.

Just like Jagtap, the 192 other farmers from 11 key cane-producing districts of Maharashtra told Reuters that prolonged dry weather conditions during summer and then heavy rains later hit the cane crop.

"The summer was harsh and then we received too much rainfall from July," said farmer Baban Karpe from Kolhapur. "The fields were waterlogged and the crop didn't get sunlight for weeks."

On average, farmers reported a 15% drop in cane yield, but in some pockets, they said the per hectare loss would be 35%.

Maharashtra, which accounts for more than a third of the country's sugar output, was expected to produce a record 13.8 million tonnes of sugar in the current marketing year that began on Oct. 1, up from the last year's 13.7 million tonnes, according to the state government.

But a 15% drop in cane yields could bring down Maharashtra's sugar production to 11.7 million tonnes, said a senior official of a sugar mill and a dealer with a trade house. Both declined to be named as they are not authorised to talk to the media.

Along with Maharashtra, cane growers from neighbouring Karnataka state also faced unfavourable weather conditions. As a result, Karnataka's sugar output looks likely to fall to 5.5 million tonnes this year against 6 million tonnes produced in 2021-22, said the mill official.

Lower sugar production in Maharashtra and Karnataka could drag down India's sugar output to 33.3 million tonnes in the current 2022-23 year against last year's record 35.8 million tonnes, the millers said in a previously unreported estimate.

LOWER EXPORTS

New Delhi has allowed mills to export 6.15 million tonnes of sugar in the first tranche, and producer body the Indian Sugar Mills Association expects India to earmark up to 4 million tonnes of sugar for overseas shipments in the second tranche.

But a drop in production means the government may allow a small amount for exports in the second tranche or even may not approve any further exports, said a Mumbai-based dealer with a global trading house, who didn't wish to be named in line with his company's policy.

India would allow exports after ensuring there are ample supplies to fulfil local demand of around 27.5 million tonnes, said a senior government official, who declined to be named.