Sugar output may dip 3% this yr to 31.5mn ton on untimely rains, pest attack & ethanol: ISMA

India's sugar output may decline by 3 per cent to 31.5 million tonnes (MT) in the current marketing year on untimely rains and pest attacks that affected the cane crop, as well as diversion of cane juice for ethanol, industry body ISMA said Monday.

The Indian Sugar Mills Association (ISMA) in July had projected a production of 35 MT in the 2018-19 season that started this month, taking into account higher cane acreage and forecast of normal monsoon.

Sugar production reached at an all-time high of 32.5 million tonnes in the 2017-18 marketing year (October-September).

In its forecast issued Monday, the ISMA reduced the sugar production estimate for the 2018-19 marketing year as the sugarcane crop in the three main growing states of Uttar Pradesh, Maharashtra and Karnataka, which contribute around 80 per cent to the total sugar output, have been impacted adversely.

"Sugar production in 2018-19 would be around 32 MT. However, this figure may be lower if we consider the expected diversion of sugar to ethanol...The sugar production estimates for 2018-19, after considering this diversion into ethanol, will be around 31.5 MT tonnes," the statement said.

The association said that there would be surplus availability of sugar in the country despite estimated fall in production because of huge carry-over stocks from the previous marketing year.

The total availability of sugar would be 42.7 MT during 2018-19 as against the annual domestic demand of 25.5-26 MT. Even if mills export 4-5 MT of sugar, the closing stock would be significantly high at 11-13 MT, it added.

According to ISMA, sugar production in UP was expected to be higher because of higher cane area under the high yielding variety Co0238.

"However, several areas in UP have had untimely rainfall in September 2018 which has adversely affected the growth of the sugarcane at this very important maturity period. Further, some areas have reported water-logging and in some parts of Western UP, there has been sugarcane lodging also," it said.

As a result, sugarcane yields and sugar recovery would be impacted. Accordingly, ISMA has revised its sugar production estimates for UP from 13-13.5 MT tonne made in July 2018 to 12.1 MT, which is almost similar to 12.04 MT in 2017-18.

In Maharashtra, sugar production is estimated at around 9.5 MT as against 10.72 MT in 2017-18. In July, ISMA had pegged output at 11-11.5 MT.

"These estimates were made considering a normal rainfall during July September 2018 which has a big influence on the sugarcane yields and sugar recovery. However, during the last 2-3 months, the rainfall in most of the sugarcane areas in Maharashtra has been substantially lower than last year same period as well as below normal average of the last three years," it said.

Moreover, white grub has infested a significant area in the districts of Ahmednagar, Solapur and Marathwada and to a lesser extent in Kolhapur, Sangli, Satara and Pune. In some small areas within the above districts, the crop has been so seriously infested that either farmers have uprooted them or the crop has not survived.

"The northern part of Karnataka being contiguous to sugarcane grown in southern part of Maharashtra, have also suffered due to lower rainfall as well as some infestation of white grub. The impact is, however, lower than Maharashtra," ISMA said.

Sugar production in Karnataka is now estimated at 4.2 MT from 4.48 MT projected in July.

"The tender for ethanol procurement for 2018-19 SS has been opened by the OMCs, and for the first time there has been a bid for 48.5 crore litres of ethanol from B' heavy molasses and 1.84 crore litres from sugarcane juice," the association said.