Indian sugar production estimates for the 2019-20 are unlikely to be revised significantly upwards from 26m tonnes when the Indian Sugar Mills Association (ISMA) meets to review figures, the trade body said on Tuesday.
Vivek Pittie, president of ISMA, told an industry conference in Dubai that the meeting will be held on February 25. "If you ask me, I don’t see significant upward revision," he said.
Sugar production in India, which vies with Brazil as the world’s biggest sugar producer, was hurt by drought in 2018 that forced farmers to curb cane planting, while flooding damaged crops in key growing regions in 2019.
As a result, the trade body has said that the country’s 2019-20 sugar output could fall 21.6% to 26m tonnes, the lowest level in three years.
For its output estimate, ISMA took into account production from Maharashtra at 6.2m tonnes. But it could be revised slightly upwards to 6.5m tonnes, Pittie said.
The trade body also estimates more than 800,000 tonnes of sugar cane production will be diverted to ethanol in the 2019-20 season. This an increase of over the 500,000 tonnes from the previous season.
"India has a lot of surplus cane and surplus feedstock which can be made into ethanol," Abinash Verma, the director general of ISMA, said.
More quantities can be diverted when sufficient capacity is created in the country, he said, adding that current capacities are at 3.5bn litres, which are much less than the requirement of 5.11bn litres.
The trade body said that it does not expect any big changes to the country’s sugar export policy. Last year, India’s government, hoping to rid the country of its vast surplus stocks, approved a sugar export subsidy of 10,448 rupees ($145.58) a tonne for the 2019-20.
That spurred complaints from rival producers Brazil and Australia to the World Trade Organization (WTO). On Sunday, Dubai’s Al Khaleej Sugar, which operates the world’s largest port-based refinery of the sweetener, said the Indian subsidies had created an unfair market.
Meanwhile, Ravi Krishnamurthy, head of sugar for the Indian subcontinent at Chinese commodities trader COFCO International, said sugar exports from the Asian country was likely to pick up in February.
Global sugar buyers are growing nervous as a much touted surge of Indian sugar exports has so far failed to materialise, with some mills remain reluctant to sell even as global prices traded near 2-1/2-year highs.
"We could be in for a small surprise because good flows have been happening, trades have happened and we could anticipate the line up of February to be as high as half am tonnes which is quite substantial," Krishnamurthy said.