India's sugar output drops 5.4% y/y as mills close early

Indian mills produced 31.1 million tonnes of sugar since the current season began on October 1, a fall of 5.4 per cent year on year, as many mills closed early due to limited availability of sugar cane, a leading trade body said on Tuesday.

Lower sugar output from India, the world's biggest producer of the sweetener, will leave hardly any surplus for additional exports during the current 2022/23 season.

Out of 532 mills that started operations in the current season, 400 mills closed operations, including all mills from the top producing western state of Maharashtra, the Indian Sugar Mills Association said in a statement.

Maharashtra's production fell to 10.5 million tonnes from 13.7 million tonnes produced a year ago, the association said.

Reuters was the first to report in December on the likely drop in production.

"The production drop in Maharashtra pulled down the country's total production. There is no scope for additional exports," said a Mumbai-based dealer with a global trade house.

The government allowed mills to export only 6.1 million tonnes of sugar in the 2022/23 season, but Prime Minister Narendra Modi's administration was expected to allow a second tranche of shipments.

India's absence from the market could lift global sugar prices, which were trading near their highest level in more than a decade, and allow rivals Brazil and Thailand to increase shipments.

India exported a record 11.2 million tonnes of sugar in the previous 2021/22 season.

India mainly exports sugar to Indonesia, Bangladesh, Malaysia, Sudan, Somalia and United Arab Emirates.

The ISMA in late-January cut its 2022/23 output estimates for the country by 7 per cent to 34 million tonnes from the previous forecast of 36.5 million tonnes. Last year, Indian mills produced a record 35.8 million tonnes of sugar.

But the dealer said the production could fall to around 33 million tonnes and support local prices, which are rising due to peak summer season demand.