USDA hikes India sugar output estimates

Sugar output of India, the world's second largest producer, is likely to touch 252 lakh tonnes in the 2006-07 season, according to a report by the US Department of Agriculture.

The department has revised its estimates upward on the back of improved sugarcane availability and reduced diversion of cane for production of other sweeteners, namely khandsari and gur (jaggery).

"Late monsoon rains in 2006 and generally favourable weather conditions in most sugarcane growing areas resulted in higher cane yields," the report said. The estimates are based on crystal weight basis.

According to the sugar industry, the output is likely to be around 265 lakh tonnes in the current season that ends September 2007 against 192.6 lakh tonnes in the previous year.

USDA said the increase in the capacities of sugar production coupled with high sugar prices at the end of last season has restricted the diversion of sugarcane to the jaggery in FY07.

The department has pegged the sugar production for FY08 season at an even higher level of 265 lakh tonnes, the report said. "High cane price and favourable weather conditions at planting encouraged increased cane planting for FY08, forecast at 4.7 million hectares compared with 4.5 million hectares in FY07," it said.

The report noted that expected bumper output in 2006-07 and 2007-08 have "caused an over supply situation and lower prices, thus eroding the financial availability of the sugar industry."