Agri Commodities Prevew: Indian Sugar Production To Increase By 4.3 percent For MY 2018/19

As per the latest official data , Indian sugar production for MY 2018/19 production is forecast to rise 4.3 percent to a record 33.8 MMT, which includes 560,000 metric tons (MT) of khandsari (a local type of low-recovery sugar prepared by open-pan evaporation) and 31.1 MMT of milled sugar (33.3 MMT raw equivalent. An expectation of an improved sugar recovery rate for the second consecutive year, increases in cane crushing volume as a result of larger cane production, and assumed benefits from higher cane byproduct production (for integrated mills) should encourage higher sugar production. Uttar Pradesh (UP) will be the largest producer of sugar in India, three-years in a row; followed by Maharashtra, which is expected to trail marginally behind UP.

Likewise sugar production in Karnataka will recover to its near normal levels (five-year average). Combined, these states will contribute almost 84 percent of total sugar production in the out-year. Cane supplies to gur (jaggery or crude, noncentrifugal lump sugar) manufacturing units will return to higher than normal levels, with out-year gur production reaching upwards of 6.6 MMT, 9.2 % above the current years estimate. Concurrently, Indias sugar production in MY 2017/18 will rise 46 percent to 32.4 MMT (combination of khandsari and mill sugar) due to higher than anticipated sugar production from Maharashtra and Karnataka. A 10 percent increase in average cane yield along with an improved national sugar recovery rate from 11 percent to 11.32 percent will contribute to record sugar production. Also, receding cane arrears (reduced debts) from preceding seasons will help increase availability of cane for supply to mills.

Out-year sugar consumption is forecast at 27.5 MMT, four percent above the current year estimate of 26.5 MMT. A strong demand from bulk buyers, food processors, quick service restaurants, sweet meat shops, households, a growing population, rising income and changing food consumption patterns should support higher consumption in the out-year.Ending stocks in the out-year are forecast upwards of 11.8 MMT and is more or less equal to a 5 month consumption requirement. Stocks for the current sugar season are slightly trailing behind at 11.5 MMT which again is sufficient for the same time period. Ideally, the minimum stock requirement is for 3 months consumption