Sugar output expected to fall 5.3% this marketing year

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 a 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 (mt) in 2013-14, compared with 25.14 mt 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 mt. However, in the absence of a major policy intervention, achieving the high export target seems difficult despite a weak rupee, sources said. The delay in cane crushing by almost a month this year in states like Uttar Pradesh, caused by a liquidity crunch faced by mills due to a mismatch between sugar and the state-fixed price of the raw material, prompted many farmers to sell their produce to competing industries, driving down sugar production. The estimates by ISMA, however, revealed the production level this year would still exceed an expected consumption of 23.5 mt, keeping supplies steady. Still, the drop in output may slightly improve realisation of mills, already running at huge losses, on sugar sales, as they will be in a better position to cut a glut in the market following years of surplus production. The incentive for raw sugar production, to the tune of R3,333 per tonne, recently announced by the government would also help. The latest estimate has factored in the crop harvested or likely to be harvested, the trend of yields and sugar recovery and a diversion of sugarcane for use by other sweetener manufacturers like gur and khandsari, an ISMA statement said. "The main reasons behind the lower sugar production in UP is damage of sugarcane crops due to heavy rainfall in eastern UP and a diversion of sugarcane by farmers to alternate sweetener producers to make way for sowing of wheat due to the late start of crushing by sugar mills. Though recovery is good in the state. Source :  http://www.financialexpress.com/news/sugar-output-expected-to-fall-5.3-this-marketing-year/1231795/2