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Sugar output seen falling 14% next season, opening stock to hit record high

Industry pins hope on exports, ethanol procurement by OMCs for buoyancy; opening stock in Oct 2019 seen at thrice 'normative requirement' of 5 mn tonnes in carryover stock

Virendra Singh Rawat  |  Lucknow 

sugarcane
sugarcane

The country’s in the 2019-20 season is projected by the industry to dip by 14 per cent from the current one, to 28.2 million tonnes (mt) from almost 33 mt now.

The next sugar year officially begins on October 1. The Indian Sugar Mills Association (Isma) has made a preliminary estimate, based on satellite images. It says output will lessen due to poor rainfall and low water availability in three major cane growing states — Maharashtra, Karnataka and Tamil Nadu.

The stock, as the next sugar year begins is expected to be a record high of 14.5 mt, almost three times the ‘normative requirement’ of five mt.

The country’s annual requirement is around 26.5 mt and there would be a surplus. Isma says export should be allowed (the central government decides whether, when and how much).

“The silver lining is that the global market is likely to have a deficit of four mt. The Centre should announce a sugar export policy early, so that millers get ample time,” Isma director-general Abinash Verma had earlier told Business Standard.

The industry body estimtes sugarcane sowing at 4.93 million hectares (mn ha) in 2019-20 or 11 per cent less than the 5.5 mn ha of 2018-19. Uttar Pradesh, the largest producing state, is estimated to have a cane area of 2.36 mn ha, two per cent less than in this year. Unit yield is, however, estimated to be higher, due to planting of better varieties; the state’s next season is projected to be 12 mt, from 11.8 mt in 2018-19.

chart

However, poor rainfall has hit second-ranked Maharashtra’s cane area by 30 per cent, to 823,000 ha; it was 1.15 mn ha this time. So, is expected to be no more than seven mt, from 10.72 mt in 2018-19. Drought-like conditions have also hit Karnataka, where the cane area and are pegged at 420,000 ha and 3.5 mt, down from 502,000 ha and 4.36 mt, respectively.

Tamil Nadu has also seen deficient rainfall. Cane sowing is expected to fall to 230,000 ha and sugar production to dip from 860,000 tonnes this year to 750,000 tonnes. The remaining states are expected to collectively produce five mt next season.

Water availability in reservoirs and a second set of satellite images will be reviewed in September/October by Isma and the estimates revised.

In 2018-19, around 295 mn litres of ethanol, a by-product of cane processing, has been supplied to the country’s three oil marketing companies (OMCs), equivalent to sugar diversion of 300,000 tonnes. This was a breather for mills, whose collective cane payment arrears (the price is set by states) are nearly Rs 20,000 crore. Half of these arrears are in UP. Since the OMCs, all central government-owned, announce their requirement in August, the sugar industry has urged the Centre to announce its policy on at the same time.

First Published: Mon, July 01 2019. 16:59 IST
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