India is likely to produce a record amount of sugar in the next marketing year from October after millions of farmers expanded cane cultivation, encouraged by ample water supplies and declining prices of competing crops, farmers and industry officials told Reuters.

The rebound in production would allow the world's second-largest sugar producer to resume exports in 2025/26, they said, after a lack of rain cut cane yields and led to two years of restrictions.

Indian exports could cap global sugar prices, traders said, by increasing supplies in the world market at a time when dry weather is widely expected to reduce shipments from top producer Brazil.

"Last year, we couldn't plant cane because water wasn't available for irrigation. This year, we have ample water since the rainfall was good," said farmer Amar Chavan, who planted cane across 2.4 hectares (6 acres) in the Solapur district of the western state of Maharashtra.

Solapur farmers depend on the Ujjani dam, which is at 100 percent of capacity, compared with just 25 percent last December.

Reservoirs in Maharashtra and neighbouring Karnataka, which together provide water for nearly half of India's sugar production, are holding much more water than in 2023, government data showed.

India's annual monsoon rains are crucial in determining the plantation area for the water-intensive sugarcane crop. This year, cane-growing regions of Maharashtra and Karnataka received up to 39 percent more rain than average.

"Farmers are planting sugarcane in full swing. This planting activity is setting the stage for a record-breaking sugar harvest next season," said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories.

India's sugar production to fall below local consumption in 2024/25 as farmers reduced area.

He noted that the cane planted this year will be ready for harvest in the next marketing year.

The country's sugar production in the current season is set to fall to 28 million metric tons, down from 31.9 million tons in the last year and below annual consumption of around 29.6 million tons, the federation estimates.

BETTER RETURNS

But ample water is not the only reason behind the farmers' drive for higher cane planting. Many farmers shifted to cane after receiving poor returns from alternative crops such as soybeans and cotton.

"Farmers shifted to other crops from sugarcane last year due to water scarcity, but they ended up incurring losses. Now they are seeking a crop that will provide assured returns," said BB Thombare, managing director of Maharashtra-based sugar mill Natural Sugar & Allied Industries.

Increased cane planting will enable India to export 3 million to 5 million tons of sugar in the next season, provided the weather remains favourable and there are no major pest infestations, said Ashwini Bansod, vice president for commodities research at Phillip Capital India.

India, whose sugar export markets include Indonesia, Bangladesh and the United Arab Emirates, was the world's No 2 exporter during the five years to 2022/23, with volumes averaging 6.8 million tons annually.