India Sugar Outlook Cut by Mills as Drought Hurts Cane Supply

(Bloomberg) -- India's sugar production may be lower than previously forecast as mills in the main growing areas of Maharashtra and Karnataka closed earlier than usual after dry weather cut cane output.

Production may total 20.3 million metric tons in year that began Oct. 1, compared with 21.3 million tons estimated in January and 23.4 million tons predicted in September, the Indian Sugar Mills Association said in an emailed statement on Tuesday. That would be the lowest since 2009-10 and compares with the government's estimate of 22.5 million tons. The country produced 25.1 million tons in 2015-16.

Stockpiles on Oct. 1 this year may slump by at least 46 percent to a 12-year low of 4 million to 4.2 million tons, the group said. That will be enough to meet demand until the end of November, and sugar produced in the 2017-18 season will arrive on the market at the end of October, it said. There's no need to supplement local supplies with overseas purchases, ISMA said, amid expectations that cane output in Maharashtra will recover.

India is the world's second-biggest sugar producer. Output is set to total 20.4 million tons in the 2016-17 season and the country may import 1.7 million tons of the sweetener, according to a Bloomberg survey last month. Even as the outlook for shrinking supply boosted domestic prices 8.4 percent since the start of December, the country has maintained an import duty of 40 percent.

Sugar sales by mills may total 23.8 million to 24 million tons this season, down from 24.8 million tons a year earlier, ISMA said.

To contact the reporter on this story: Pratik Parija in New Delhi at pparija@bloomberg.net.

To contact the editors responsible for this story: Phoebe Sedgman at psedgman2@bloomberg.net, Nicholas Larkin