India's sugar output set to drop 7%, could crimp exports

By Rajendra Jadhav

SOLAPUR/KOLHAPUR/LATUR, India, Dec 5 (Reuters) - India'ssugar output is likely to fall 7% this year as erratic weatherconditions have cut cane yields, which could dampen exports fromthe world's biggest producer of the sweetener, farmers, millersand traders said.

Lower sugar exports from India, also the world's secondbiggest exporter, could lift global prices andallow rivals Brazil and Thailand to increase their shipments.

"The crop was just looking like last year but when westarted harvesting we realised that yields were very low," saidPradip Jagtap, a farmer from the Solapur district of the westernstate of Maharashtra, India's No.1 sugar-producing state.

This year, Jagtap could gather 530 tonnes of cane from hisnine-acre plot, down from the previous year's 750 tonnes.

Just like Jagtap, the 192 other farmers from 11 keycane-producing districts of Maharashtra told Reuters thatprolonged dry weather conditions during summer and then heavyrains later hit the cane crop.

"The summer was harsh and then we received too much rainfallfrom July," said farmer Baban Karpe from Kolhapur. "The fieldswere waterlogged and the crop didn't get sunlight for weeks."

On average, farmers reported a 15% drop in cane yield, butin some pockets, they said the per hectare loss would be 35%.

Maharashtra, which accounts for more than a third of thecountry's sugar output, was expected to produce a record 13.8million tonnes of sugar in the current marketing year that beganon Oct. 1, up from the last year's 13.7 million tonnes,according to the state government.

But a 15% drop in cane yields could bring down Maharashtra'ssugar production to 11.7 million tonnes, said a senior officialof a sugar mill and a dealer with a trade house. Both declinedto be named as they are not authorised to talk to the media.

Along with Maharashtra, cane growers from neighbouringKarnataka state also faced unfavourable weather conditions. As aresult, Karnataka's sugar output looks likely to fall to 5.5million tonnes this year against 6 million tonnes produced in2021-22, said the mill official.

Lower sugar production in Maharashtra and Karnataka coulddrag down India's sugar output to 33.3 million tonnes in thecurrent 2022-23 year against last year's record 35.8 milliontonnes, the millers said in a previously unreported estimate.

LOWER EXPORTS

New Delhi has allowed mills to export 6.15 million tonnes ofsugar in the first tranche, and producer body the Indian SugarMills Association expects India to earmark up to 4 milliontonnes of sugar for overseas shipments in the second tranche.

But a drop in production means the government may allow asmall amount for exports in the second tranche or even may notapprove any further exports, said a Mumbai-based dealer with aglobal trading house, who didn't wish to be named in line withhis company's policy.

India would allow exports after ensuring there are amplesupplies to fulfil local demand of around 27.5 million tonnes,said a senior government official, who declined to be named.

(Reporting by Rajendra Jadhav; editing by Mayank Bhardwaj andDavid Evans)

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