Sugar output might fall a bit in 2015-16

Isma estimates production to be 27 million tonne due to poor rains in Maharashtra and KarnatakaOutput may fall 5% due to poor rains

In the 2015-16 sugar season that starts next month, production is estimated to be a million tonnes less than the earlier estimate of 28 mt due to poor rain in Maharashtra, the country’s biggest producing state, and in Karnataka.

Stocks of some big sugar companies went up in anticipation of some support to prices. Shares of Balrampur Chini closed 11.5 per cent higher at Rs 53.45. Renuka Sugar was up 4.6 per cent at Rs 7.73. Shares in Bajaj Hindusthan, the country’s biggest miller, closed up 3.8 per cent at Rs 13.58. The broad BSE Sensex was down by almost one per cent.

According to Indian Sugar Mills Association (Isma), production in 2015-16 in Maharashtra is now estimated at nine mt, down from the earlier estimate of 9.7 mt. In Karnataka, the estimate is 4.6 mt, down from this year’s estimate of five mt.

However, in Uttar Pradesh, the second biggest sugar producer, output in 2015-16 is expected to be better than the previous estimate, done in July. Isma said the state was estimated to produce around 7.5 mt in 2015-16, up from 7.35 mt earlier.

Domestic prices have been falling for a year. The stock with mills at the start of the season would be around 9.6 mt, up from 7.5 mt last year. So, a one mt drop in output is not expected to have much impact in stopping the price fall, as it would still be much more than the estimated domestic consumption of 23-24 mt.

Total sugarcane sowing, says Isma for 2015-16, is estimated to be around 5.28 million hectares, only 0.4 per cent less than in the 2014-15 season.

Its estimate for production in Maharashtra is 14.3 per cent less than that of 10.5 mt in 2014-15. In Karnataka, the erratic monsoon in some parts of north Karnataka, it said, should mean less yield, and overall production is estimated to be around 4.6 mt about 0.4 mt less than 2014-15.

In UP, home to the largest number of mills in the private sector, “there was no heavy rainfall or flooding in the state and, as such, no adverse impact on the crop. More, with large areas under better varieties, cane yields and sugar recoveries are better. Considering these factors, it is expected that yield per hectare and sugar recovery percentage will improve in 2015-16,” said Isma.