Dry Weather Seen Shrinking Sugar Output in India's Top Producer

  • Production in Maharashtra to decline 19% to 8.5 million tons
  • Region facing water shortage and cane may be used as fodder

Sugar harvest in Maharashtra, India’s top producer, may tumble this year as a dry spell triggered by the strongest El Nino in two decades hurt crop yields.

Production may decline 19 percent to 8.5 million metric tons in the year starting Oct. 1 from 10.5 million tons in the previous season, Sanjeev Babar, managing director of Maharashtra State Cooperative Sugar Factories Federation Ltd., said by phone from Mumbai on Sept. 7. The cane harvest may drop to 75 million tons to 80 million tons, from 92.9 million tons a year earlier, he said.

A smaller harvest in India may help narrow a fifth year of global surplus that’s pushed down prices in New York for a fourth straight year. Futures gained for a second week as El Nino-induced dry weather threatens crop in Thailand, the second-largest shipper and on signs of demand improving from China, the world’s top importer.

“Barring some places, the overall crop is in a bad shape because of the dry weather,” Babar said. “Crushing will be definitely delayed beyond Oct. 15. A lot of cane is being diverted for use as cattle fodder.”

Moisture Stress

Rice, soybean and sugar cane are among crops in India facing moisture stress as the strongest El Nino since 1997-98 parches vast tracts of farm land. The water level in 17 main reservoirs in Maharashtra was 41 percent below average on Sept. 3, government data show. Rains have been 17 percent to 52 percent less than normal across Maharashtra since June 1, according to the weather office.

Prices on the ICE Futures U.S. climbed 2.7 percent last week to 11.27 cents a pound, rebounding from a seven-year low of 10.13 cents reached on Aug. 24. White sugar for December delivery on ICE Futures Europe traded 0.2 percent lower at $351.40 a ton on Monday.

The Indian Sugar Mills Association will analyze rainfall data this month before revising its estimate of 28 million tons of production for the nation in 2015-16, Director General Abinash Verma said by phone on Monday.

“There is a drought like situation in Maharashtra which may negatively impact productivity and recovery,” Verma said. “The retreating monsoon has been good in the last three years in Maharashtra. We would like to wait before reviewing our forecast.”

For Related News and Information:
Raw Sugar Climbs Most Since 2011 as Weather Threatens Supplies
China Sugar Collapse Awakens Bulls as Thai Imports Quadruple
Crops in India in Dire Need of Rain as El Nino Hurts Monsoon
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