Sugar output in India expected to rise by 17.69% to 32 MT in 2020-21: ISMA

There is likely 1% fall in sugarcane area to 22.92 lakh hectares this year

Sugar output in India, the world's second largest producer after Brazil, is expected to increase by 17.69 per cent to 32.01 million tonnes during the season beginning October 2020 on likely higher availability of sugarcane for crushing, industry body ISMA said on Thursday.

The country's sugar output has reached 27.02 million tonnes (MT) so far in the ongoing 2019-20 season (October-September). About 1,50,000 tonnes of sugar production is expected by season-end, taking total output to 27.2 MT for this season, it said in a statement. On sugar demand and prices, the industry body said the offtake seems to have reached normal levels after the government relaxed lockdown rules.

The ex-mill sugar prices, which had fallen to around Rs 31-31.50 per kg during the lockdown due to drop in domestic sales, have improved quite significantly to reach near the levels seen during pre-lockdown at around Rs 32-33.50 per kg.

"As per total sugarcane expected to be available to the sugar industry for making sugar, ISMA estimates sugar production of 32.01 million tonnes in the season 2020-21. This is assuming normal rainfall and other optimum conditions during the remaining period," theIndian Sugar Mills Association (ISMA) said, releasing preliminary estimates.

The estimates have been released without considering reduction of sugar because of diversion of B-heavy molasses and sugarcane juice into production of ethanol, it said.

According to ISMA, sugar production in Uttar Pradesh -- the country's largest sugar producing state -- is expected to decline marginally to 12.30 MT in the 2020-21 season from 12.64 MT in the current season.

This is because there is likely 1 per cent fall in sugarcane area to 2.292 million hectares this year and also yields and sugar recovery increase would be marginal, it said.

But sugar production in Maharashtra, the country's second largest sugar producing state, is expected to increase to 10.13 MT in 2020-21 from 6.16 MT this season. Sugarcane area has gone up by about 43 per cent this year on account of good rains although 50,000 hectares cane area was completely lost due to floods in July- August 2019.

Normal southwest monsoon and above normal level of reservoirs is found to be beneficial for early growth of adsali and pre-seasonal crops. And overall yield per hectare is expected to go up in the state, it added. Sugar production in Karnataka, the country's third largest sugar producing state, is expected to increase to 4.31 MT in 2020-21 as against 3.41 MT this season.

ISMA has pegged sugar output to be 7,51,000 tonnes in Tamil Nadu, 10,81,000 tonnes in Gujarat and the remaining states at 3.43 MT in the forthcoming 2020-21 season.

On cane area, the industry body said based on the satellite images procured in the latter part of June 2020, the total acreage under sugarcane in the country is estimated to be around 52.28 lakh hectares in 2020-21 season, which is about 8 percent higher than 2019-20 sugar season's cane area of around 48.41 lakh hectares.

With higher availability of cane and surplus sugar production again in next year, it is estimated that a larger quantity of cane juice and B-molasses will get diverted to ethanol, it said, adding that a significant diversion will be seen in Maharashtra and Karnataka, in addition to Uttar Pradesh.

Accordingly, it is estimated that the diversion of cane juice and B-molasses to ethanol will reduce sugar production by 1.5 million tonnes in the next season, as compared to the 800,000 tonnes diverted this season, it added.

ISMA said however the extent of this diversion will be clear once the tenders floated and bids are submitted by millers for ethanol supplies, which will be sometime in September. On ethanol, the industry body said against an annual supply contract of 170 crore litres for 2019-20 season (Dec-Nov), 88 crore litres have already been supplied till June 15, 2020.

Ethanol blending in petrol for the country as a whole has therefore reached at 4.97 per cent as up to June 15. This is despite the lower production of sugarcane and molasses due to drought in Maharashtra and Karnataka.

The third tender was floated for more ethanol on June 1, 2020, at the same prices decided by government in July 2019, and the bids are expected to be opened soon, which will increase supplies, it added.

After considering rainfall in JulySeptember, 2020, water situation in reservoirs, rainfall during monsoon season and second set of satellite images in September 2020 across India, ISMA will review the analysis and if required will release its 1st advance estimates for 2020-21 season in September 2020.