Sugar Harvest in India Set to Drop on Maharashtra Drought: Pawar

Sugar output in India, the world’s second-biggest producer, will probably decline for the second year beginning in October as dry weather curbs planting, Agriculture Minister Sharad Pawar said.

The lack of water is serious in Maharashtra, the second-largest cane growing state, and will reduce sowing, Pawar said in New Delhi today after a meeting of ministers. Production may drop to 24 million metric tons from 24.5 million tons this season, he said.

The decline in output may spur an increase in imports, supporting futures. Prices fell 22 percent in the past year in New York on a global supply glut. The government has withheld supplies to meet drinking water needs in some districts of Maharashtra, said Pawar. Lower output in the state may be partly offset by a larger area in Uttar Pradesh, the biggest cane producer, he said.

India may receive normal monsoon rains this year, Jatin Singh, chief executive of Skymet Weather Services Pvt., said in an interview yesterday. The chances of a drought are only 4 percent, according to Singh, who correctly predicted the event in 2009. The India Meteorological Department will issue its first monsoon forecast next month.

The drought situation in the Marathwada region of Maharashtra state is the worst in 40 years, said Pawar today. The situation is better in Uttar Pradesh, he said.

The federal government approved a relief package of 12.07 billion rupees ($222 million) for Maharashtra, he said. A total of 28.9 billion rupees was approved for seven states affected by drought and floods, he said.

Before it's here, it's on the Bloomberg Terminal.