Sugar output in India, the world’s second-biggest producer, fell marginally until February from a year before, signalling a slowdown in production as the peak crushing season is almost over.

Sugar production touched 18.80 million tonnes since the marketing year started on October 1, down 60,000 tonnes from a year before, as 50 mills have closed cane-crushing operations for the season so far, compared with 21 last year, showed data released by the Indian Sugar Mills Association (ISMA) on Monday.

ISMA retains its forecast of a 7.3% drop in sugar output to 24.3 million tonnes for the 2012-13 due to poor monsoon rains initially.

“Maharashtra, which was 2.8% ahead in sugar production over last year until a fortnight ago, has also lost pace. About 30 sugar mills in the state (22 in the last 15 days alone) have closed their crushing operations. The state has produced 6.53 million tonnes of sugar till the end of February, against 6.50 million tonnes last year. Sugar recovery is about 11.15%, which is again 0.18% less than last year,” ISMA said.

However, both the top sugar industry bodies — ISMA and the National Federation of Cooperative Sugar Factories — have also said the country's sugar production will liklely exceed demand in the current marketing year, keeping domestic supplies steady. The country needs 22-23 million tonnes for annual consumption. While the government has projected an output of 23 million tonnes, NFCSF has forecast production of 24.5 million tonnes for 2012-13.

Higher production has prevented a flare-up in the commodity's prices this year despite a steady rise until August on fears that poor showers in June and July would hurt cane yield, especially in biggest producer Maharashtra. Retail sugar prices, on an average, remained flat around R38 a kg, thanks to strong production so far and more offloading of the sweetener in the open market. But exports are still not viable as domestic prices rule above those of global varieties.

Uttar Pradesh has produced 5.03 million tonnes of sugar, 5% less than a year before. The recovery rate in the state is 8.95%, up about 0.1% over a year earlier. “A fortnight ago, Uttar Pradesh was trailing last year's output level by 4%. Even though this gap has widened to 5%, it is due to 15 days of continuous cold and unseasonal rains, which hampered sugarcane arrival to the mills,” ISMA said.