Rating agency ICRA has revised downwards its sugar production target for 2019 to 30.7 million tonnes (mt) from its earlier estimate of 31.5 mt due to a decline in Uttar Pradesh, the largest growing State.

The agency, however, said even at this level, sugar supply will be higher than demand.

ICRA on Friday said production may be further hit due to the diversion of ‘B’ heavy molasses and sugarcane juice away from sugar into ethanol.

The agency said a downward revision in sugar production estimatealong with a series of government support measures — both by the Centre and the States — from May 2018 have provided some relief to sugar mills hit by supply glut.

However, the agency expects sugar production to be higher than consumption.

“We expect sugar production to continue to outstrip consumption by around 4.5-5 million tonne in spite of expected diversion of sugarcane to ethanol manufacture and lower production estimates, resulting in continued supply pressures,” the report said.

But ICRA added that the Centre hiking the minimum support price for sugar, and States offering cane subsidies/soft loans to the manufacturers of ethanol from cane juice and B-heavy molasses are likely to provide some respite to mills in the near term.