The country's sugar output dropped 3.2% until mid-May in the marketing year through September, partly due to diversion of cane to other consuming industries in states such as Uttar Pradesh due to a delay in crushing by almost one month. Exports are, however, expected to surge manifold to around 2 million tonne in the entire marketing year, compared with just 0.34 million tonne in 2012-13, according to the Indian Sugar Mills Association (ISMA).

Sugar output in the world's second-largest producer hit 23.90 million tonne between October 1 and May 15, compared with 24.70 million tonne a year before, according to the ISMA data. Cane crushing has come to an end in the country, except for 20 sugar mills in Tamil Nadu. This means the production level so far has just exceeded the ISMA forecast of 23.80 million tonne for the entire 2013-14 season, although output may not be significantly more than the predicted level.

India's sugar output will likely drop 5.3% in the current marketing year through September, marking a second successive year of decline, mainly due to rough weather in key producing regions and diversion of cane for use by jaggery makers, a top industry body said on Thursday.

Sugar output in the world's largest consumer and second-biggest producer will likely drop to 23.80 million tonne in 2013-14, compared with 25.14 million tonne a year before, according to the latest estimate by the Indian Sugar Mills Association (ISMA). Last August, ISMA had forecast sugar production for 2013-14 at 25 million tonne.

The country had produced 25.14 milllion tonne in 2012-13, compared with 26.34 million tonne a year earlier, while consumption had risen 3.6% to 22.80 million tonne last year from 2011-12. As many as 526 mills crushed about 250 million tonne of cane last year, down around 2.5% from a year earlier.

This year, Maharashtra produced 7.70 million tonne of sugar until May 15, almost unchanged from a year before. However, sugar output in Uttar Pradesh, the second-largest producer, hit 6.45 million tonne, down almost 13.4% from a year before.

Earlier this year, mills in Uttar Pradesh expressed their inability to start crushing cane after banks refused to lend them working capital loans citing a drastic mismatch between cane and sugar prices. This forced farmers to sell cane to competiting industries initially, resulting in a drop in sugar production.

Karnataka produced 4.1 million tonne of sugar up to May 15, up 7,00,000 tonne from the same period last year. In Tamil Nadu, production hit 1.15 million tonne, down from almost 1.6 million tonne a year before.

Despite lower production in 2013-14, supplies would continue to be ample as the country had started the current year with stocks of 10.77 million tonne, up from 9.27 million tonne a year before. The opening stocks of 2013-14 were the highest since 11.03 million tonne in 2006-07.