Sugar output in Maharashtra to fall on low area

Sugar output in Maharashtra, the nation’s biggest producer, may drop next year as farmers reduce the area planted because of lower sweetener prices, a producers’ group said.

Output in the year beginning October 1 may decline nine per cent to 8.3 million tonnes from a forecast of a record 9.15 million tonnes this year, Prakash Naiknavare, managing director of the Maharashtra State Cooperative Sugar Factories Federation Ltd., said in a phone interview on Thursday.

Lower production may prompt India to extend curbs on exports, likely helping sugar futures in New York rebound from a 37 per cent slump since reaching a 30-year high in February. India won’t permit additional exports until it assesses the harvests next season, food minister K V Thomas said on May 25.

“Pressure on global prices will arise only once India opens up shipments,” Vedika Narvekar, an analyst at Angel Commodities Broking Pvt, said by phone from Mumbai.

Raw sugar for July delivery climbed as much as 1.7 per cent to 22.83 cents a pound on ICE Futures US in New York on Thursday, while refined-sugar futures for August delivery advanced as much as 0.7 per cent to $669 a ton on NYSE Liffe in London.

India suspended free exports of sugar last year after the worst monsoon in 36 years in 2009 damaged crops. The government has eased the restrictions to allow mills to ship about 1.7 million tonnes since the crop year began on October 1.

RISING OUTPUT
Immediate-delivery sugar prices have dropped 10 per cent this year in Vashi in Mumbai, the country’s largest wholesale market for the commodity, extending a 17 per cent decline in 2010.

Raw sugar futures in New York have slumped 30 per cent this year after climbing 19 per cent last year on forecasts for higher output from Brazil and Thailand, the biggest shippers.

The area under sugarcane in Maharashtra is estimated at about 970,000 hectares (2.4 million acres) in the 2011-2012 season, down 4.9 per cent from 1.02 million hectares this year, Naiknavare said. Some farmers may divert cane area to crops such as soybeans, sunflower and maize due to higher prices, he said.

“Farmers are not sure of the price they will get for next year,” Naiknavare said. “This year, cane prices were far below expectations.” Mills in Maharashtra may crush 73 million tonnes of cane next crop year, compared with 81 million tonnes estimated for the current year, he said.