Sugar output in India, the world's second-biggest producer, inched up nearly 3% until February 15 due to a pick-up in cane crushing, raising hopes that output for the marketing year through September would exceed both official and industry forecasts.

Sugar production touched 16.59 million tonne since the marketing year started on October 1, and almost 168 million tonne of sugarcane has been crushed with an average recovery of 9.8% since then, showed data released by the Indian Sugar Mills Association (ISMA) on Monday. The country has crushed about 1.70% more sugarcane than last year and recovery rate is also better than a year before, ISMA said.

However, ISMA maintains its forecast of a 7.3% drop in sugar output from a year earlier to 24.3 million tonne for the 2012-13 due to poor monsoon rains initially, despite higher production so far. However, top sugar industry bodies — ISMA and National Federation Of Co-operative Sugar Factories — have also said the country's sugar production will likely exceed demand in the current marketing year. The country needs 22-23 million tonne for annual consumption. While the government has projected the output at 23 million tonne, NFCSF has forecast production of 24.5 million tonne in 2012-13.

Higher production has prevented a flare-up in the commodity's prices this year following a steady rise until August on fears that poor showers in June and July would hurt cane yield, especially in the biggest producer, Maharashtra. Wholesale sugar prices have remained unchanged in Mumbai with the M30 variety ruling in the range of R3,262 to R3,431 a quintal, thanks to higher production and more offloading of the sweetener in the open market, according to official data.

However, exports are still not viable as domestic prices are ruling above those of comparable global varieties.

While Maharashtra has produced 3% more sugar at 5.78 million tonne, showing 11% recovery, Karnataka has produced about 2.83 million tonne and has crushed 9% more sugarcane than last year.

“Maharashtra and Karnataka have already started showing signs of lower sugarcane availability for the current season, 2012-13. Both the states are expected to crush about 90 million tonne of sugarcane to produce around 10 million tonne of sugar...,” ISMA said.

Uttar Pradesh has produced 4.36 million tonne of sugar, which is about 4% lower than a year before. The recovery rate in the state is 8.9%, up about 0.2% from a year earlier.” Recovery could further improve in days to come as the ratoon crop is over and plant cane has started coming for crushing,” ISMA said. Tamil Nadu and Andhra Pradesh have produced 7,80,000 tonne and 7,30,000 tonne of sugar, which is about 3% and 1% higher than last year’s output, respectively.