Sugar output could rise nearly 2 percent from previous forecast

By Rajendra Jadhav

PUNE, India (Reuters) - India's sugar output could rise nearly 2 percent this year from a previous forecast, as production in top-producing Maharashtra is expected to hit a record high, trade and government officials said on Thursday.

India's sugar output is expected to reach 26.5 million tonnes in the year to September 2015, half a million tonnes more than a previous forecast of a leading industry body, Yatin Wadhwana, managing director of Sucden India, said at the India Sugar Forum conference.

"Production in Maharashtra and Karnataka would be higher than our earlier estimates. It will push overall production above 26.5 million tonnes," Wadhwana said referring to the two leading sugar producing states.

The Indian Sugar Mills Association, a body of private millers, has forecast this year's output at 26 million tonnes against 24.4 million in the previous year.

Higher output in Maharashtra is expected to offset any drop in production from Uttar Pradesh, the second-biggest sugar producing state.

"Availability of cane in the state (Maharashtra) is higher than what we had thought. We will produce over 10 million tonnes sugar this year," Bipin Sharma, Maharashtra's sugar commissioner, told Reuters.

Maharashtra was earlier expected to produce 9.3 million tonnes.

Surplus output will put further pressure on mills as demand from local and overseas buyers is quite weak, said Kamal Jain, managing director of brokerage Kamal Jain Trading Services.

Higher output will add pressure on local prices, which are ruling near their lowest level in 4-1/2 years.

It could also hit margins of millers such as Bajaj Hindusthan Ltd, Shree Renuka Sugars Ltd and Balrampur Chini Mills Ltd.

A sharp drop in Brazil's currency the real has thwarted India's efforts to increase raw sugar exports despite New Delhi's decision to give an incentive to boost shipments.

(Editing by Mayank Bhardwaj and Jason Neely)