India’s sugar output next season may rise to 36 million tonnes, says USDA

The United States Department of Agriculture (USDA) said sugar production in India is expected to increase by 4 million tons to 36 metric tons in the 2023-34 season (October 2023 – September 2024). Analysts say that output could be affected if El Niño turns into a strong event in Asia.

India’s production is estimated at 4 million tons to 36 metric tons in the sugarcane and high crop area. Consumption is expected to rise due to increased demand from wholesale buyers and processed food manufacturers, the US Department of Agriculture said in its semi-annual report “Sugar: Global Markets and Trade.”

India’s sugar production in the 2022-23 season was estimated at 32.8 metric tons, down from 3.8 million tons last season, by the Indian Sugar Mills Association (ISMA), a body of private mills. Production was initially estimated at over 36 metric tons.

Impact in 2015-2016

This season, sugar production in India has been affected by the unseasonal rains affecting production in Maharashtra and Karnataka. ISMA will likely come up with its 2023-24 sugar production forecast in July.

On average, the climate shift to El Niño leads to below-average precipitation levels during the monsoon season, research agency BMI, a unit of Fitch Solutions, said in India. She said this is not always the case. “Looking at India’s sugar production during the strong 2015-2016 El Niño, domestic production fell sharply, falling by about 10 percent,” BMI said.

Similarly, production has faltered in other important Asian markets, including Thailand, where production was also restricted by about 10 percent during the last strong El Niño, he said, noting that the transition to El Niño could have dire consequences for production. main sugar. countries.

rising global output

Tarun Sawhney, vice-chairman and managing director of Triveni Engineering and Industries Ltd, said El Nino could have some impact. But from a sugar perspective, I think we will still have an excess of sugar in the country. We will have enough sugarcane to meet the ethanol blending program and we will have a surplus.” Business line. Triveni Engineering owns seven sugar mills in Uttar Pradesh.

The US Department of Agriculture said in its report that global sugar production is expected to rise by 10.6 million tons at 187.9 million tons, with increased production in Brazil and India more than offsetting the decline in Russia.

The Czapp portal of international sugar brokerage Czarnikov forecast production of the commodity next season at 178.8 metric tons. This is lower than the April estimate as you would expect El Nino to affect the crop in Thailand.

BMI predicts that if weather conditions are right, there could be a 6.9 million tonnes sugar surplus in 2023-24. However, during the 2015-16 El Niño, global production contracted by 7.1 percent year-on-year, which applies to the 2023-24 production figures, indicating that global production balance forecasts will swing from surplus to deficit.

High consumption

One of the concerns regarding the 2023-24 season is the increase in consumption and the balance of supply and demand. The US Department of Agriculture expected global demand to rise to 180.04 metric tons. This will leave the finish stock at 33.45 mt. Czapp sees consumption outstripping supply at 178.9 metric tons.

Indian demand is expected to reach 31 million tons by the USDA, while it may export 7 million tons against 6.1 million tons this year. “Exports are expected to rise only slightly due to the possibility that the government will maintain an export cap to control inflation,” it said.

In the 2021-22 and 2022-23 seasons, India limited sugar exports to ensure ample supply in the domestic market. From 2021-22, exports were restricted at 10 million tons, although 11.2 million tons were eventually shipped. This season, the export cap is set at 6 metres. “If India does not export sugar in the next season, global prices could go up dramatically,” Sawhney said.

Harvest may be hit

BMI said, “Looking at Brazil, while an El Niño event would normally lead to increased rainfall in the world’s largest producer, as it did in 2015-16, heavy rains will delay the progress of the country’s harvest, which runs from May to December.”

However, the strength of the looming El Niño phenomenon remains unclear, and much will depend on its severity, the research agency said. “If El Niño is strong, we expect further constraints on global production and concerns about global supply to increase, ensuring that prices find further support,” BMI said.