New Delhi: Sugar output in India, the world’s largest consumer and second-biggest producer, will likely decline by 4% during the next marketing year starting October to 24 million tonne from an earlier forecast due to poor monsoon showers, the Indian Sugar Mills Association (Isma) said on Monday. However, sugar supplies will still exceed consumption, preventing any irrational spike in prices, which have risen by more than 15% since July on fears poor rainfall would hurt cane yield.

Isma had in June predicted sugar production of 25 million tonne for 2012-13, compared with the actual production of 26 million tonne in 2011-12, the association said in a statement.

Isma said sugar stocks at the start of the next marketing year are estimated at 6 million tonne from 5.5 million tonne in the previous year, thanks to higher production in 2011-12. The country consumes around 21.5 million to 22 million tonne of sugar a year.

Production in the largest producing state of Maharashtra will likely fall by nearly 28% to 6.5 million tonne in 2012-13 on poor showers in some parts and diversion of cane for fodder, while output in Karnataka may slump 21% to three million tonnes, Isma said. However, production in Uttar Pradesh may rise by close to 13% to 7.9 million tonnes due to a 10% rise in cane planting. Analysts still believe India, which has been exporting sugar for the past two years, would be in a position to ship the sweetener in 2012-13 as well. India's sugar exports touched a four-year high of 3.15 million tonne until August 28 this year, and another 200,000 tonne of sugar are lying in ports for shipments.

“Considering surplus sugar production in the next year and a very comfortable opening balance as of October 1, there will be enough sugar to meet the domestic requirement throughout the next sugar season,” an Isma statement said.

Both Isma and National Federation Of Co-operative Sugar Factories Ltd (NFCSF) have also said the country would have enough leeway to allow exports in 2012-13 as well.

Sugar prices started creeping up since June after poor monsoon rains affected sowing and also sparked fears of a drop in yield. Prices have since moved up by around 20% in the retail market.