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India’s sugar output may decline by 8.4% in 2019-20: USDA

The US Department of Agriculture (USDA) in its latest report has said that sugar production of India is likely to decline by 8.4% to 30.3 million tonnes for the second straight year in the 2019-20 marketing year (October-September) that would begin from October because of likely fall in sugarcane output. This includes 6,00,000 tonnes of khandsari and 29.7 of mill sugar. The sugar output in the ongoing 2018-19 marketing year is pegged at 33 million tonnes, lower than 34.3 million tonnes achieved in the previous year.

According to the USDA, lower than expected cane production in the out-year coupled with a net reduction in the national-average sugar recovery rate will reduce cane availability for direct crush-to-sugar and proportionately moderate sugar output as well. In addition, successive benefits from the dedicated supply of cane juice/B-heavy molasses for fuel ethanol production will further incentivise mills to divert excess sugar to produce fuel ethanol and thus improve cash flows.

Despite the trend, for the third time in the last four years, Uttar Pradesh will be the largest producer of sugar in India. This will partially compensate for lower output from Maharashtra and Karnataka. Overall, sugarcane output will be down 8% to 355 million tonnes from 4.7 million hectares. Assuming normal market conditions, the USDA report said that India should be able to export upwards of 3.5 million tonnes of sugar but with some incentives after adjusting for a modest rise in sugar consumption to 28.5 million tonnes. That will still leave stocks of a record 17 million tonnes, which is roughly seven months of consumption.

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