Indian sugar mills association

Drought effect: Sugar harvest may see 7-yr low

Date:	02 May 2016

Source:	The Economic Times

Reporter:	Pratik Parija

News ID:	5489

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NEW DELHI: India, the world's second-largest sugar producer, may harvest the smallest crop in seven years after drought cut cane planting.

Output will probably drop 7% to 23.5 million metric tonnes in the year beginning October 1, from an estimated 25.3 million tonnes this season, according to the median of estimates from seven traders, analysts and industry officials. That would be the lowest since the 18.9 million tonnes in 2009-10, Indian Sugar Mills Association data show. The government on Thursday estimated 2016-17 output at 23 million tonnes to 24 million tonnes.

The first back-to-back shortfall in monsoon rainfall in three decades has left vast tracts of India reeling under a severe drought, prompting farmers to cut cane planting to conserve water for drinking.

The decline in Indian output coincides with a shortfall in Thai and Chinese production, setting the stage for the first global deficit in five years. A 37% rally in prices in India in the past year prompted PM Narendra Modi to impose limits on amount of sugar traders can stockpile.

"India has sizable stocks and if there are sufficient stocks it will be comfortable," Michael McDougall, director at Societe Generale in New York, said. "Imports for consumption are not possible unless the unthinkable happens, which means monsoon fails." India will have 30 million tonnes to 31 million tonnes of sugar available in 2016-17, including 7.3 million tonnes of stockpiles from the previous season.

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