Sugar output revised upwards by 2% to 26 MT for 2014-15

Sugar production estimate has been revised upwards by 2% to around 26 million tonnes in this marketing year ending September -- a development which the industry said would put pressure on prices if surplus sweetener is not exported.

The ex-mill price of sugar has already declined by about Rs 3 per kg since October 2014 when the crushing started. The price is ruling at its lowest in the last three years, according to Indian Sugar Mills Association (ISMA).

"Sugar mills are expected to produce around 26 million tonnes," ISMA President A Vellayan told reporters while releasing the latest production estimates for 2014-15 marketing year (October-September).

In its previous forecast, ISMA had projected output at around 25.5 million tonnes for the current marketing year.

With this upward revision, sugar output is now estimated to be higher by 7% as compared to 24.3 million tonnes output achieved in the previous 2013-14 marketing year. Maharashtra production is projected to rise to 9.5 million tonnes from 7.7 million tonnes in the previous year.

ISMA projected the annual domestic demand of sugar at 24.8 million tonnes.

India is the world's second largest producer of sugar after Brazil. India is also biggest consumer in the world.

"The ex-mill sugar prices are at its lowest in the last three years... Prices have declined roughly by about Rs 3 per kg since October when crushing season started," Vellayan said.

At present, ISMA Director General Abinash Verma said, the ex-factory price in Uttar Pradesh and Maharashtra are ruling at Rs 2,750 per quintal and Rs 2,450 per quintal, respectively while the cost of production in UP and Maharashtra stood at 3,500 and Rs 3,000 per quintal.

Asked about the impact of higher sugar production on prices, Vellayan said: "It will put pressure on prices if the incentives are not announced for export of raw sugar".

With opening stock of 7.5 million tonnes of sugar, he said at least 2 million tonnes of surplus sugar need to be exported to check the sliding prices of sugar.