Sugar production estimated to decline in SY14: ICRA

Domestic sugar production is estimated to decline in SY'14 (sugar year beginning October) due to excessive rains in Uttar Pradesh and previous year's drought in Maharashtra, according to a report by ICRA.
"ICRA expects the domestic sugar production to decline in SY'14 following a lower sugar production in UP on account of excessive rains and diversion of crop to alternate sweeteners while sugar production in Maharashtra is likely to get affected by the previous year's drought," the report said.
In addition to this, lower rainfall in Tamil Nadu is likely to impact sugar production and the output is expected to decline by 15 per cent, ICRA said.

Further, there has been a delay in the commencement of crushing across the country due to a delay in the fixing of the cane prices.
However, high opening stock of 8.5 million tonnes coupled with limited scope for exports with continuing low global prices are likely to result in continuation of sugar surplus in the country in SY'14, the agency said.
"Notwithstanding the expected decline in the domestic sugar production during SY14 and lower imports, surplus sugar in the market coupled with the suppressed export scenario due to low global sugar prices, ICRA expects the domestic sugar prices to remain subdued in the near term," ICRA Senior VP, Co-head corporate sector ratings Sabyasachi Majumdar said.

He said even as the government has announced export subsidy of Rs 3,333 per tonne for 4 million tonnes of raw sugar for February - March 2014, ability of the sugar mills to sell the raw sugar in the international markets remains critical as the global prices are declining.
Going forward, with the continuing cost pressures and declining sugar prices in the international markets, the rationalisation of the cane costs remains critical for the profitability of the sugar mills.