Maharashtra sugar output to fall to lowest in four years due to driest August

Maharashtra is likely to witness a 14% fall in sugar output in 2023-24 following the driest August in more than a century. The output will be the lowest in four years, industry and government officials told Reuters.

Meanwhile, the government has sought data on the current sugar stocks to ensure sufficient availability at reasonable prices. This will include a collection of data on sugar stocks sold to sugar traders/wholesalers other than sugar mills.

Maharashtra could produce 9 million metric tons in the 2023-24 season, BB Thombare, president of the West Indian Sugar Mills Association, told Reuters. The state accounts for more than a third of country's sugar output.

Thombare added that the crop did not receive ample rainfall during the crucial growth phase this year. The state received 59% lower rainfall than normal during August.

The state's sugar commissioner Chandrakant Pulkundwar told Reuters that the crop badly needs good rainfall in September to limit damage caused by the dry spell.

Maharashtra's output is crucial to India's ability to export. In 2021-22, the state produced a record 13.7 million tons, allowing the Centre to export a record 11.2 million tons. The Centre is expected to ban mills from exporting sugar in the season beginning October, three government sources told Reuters in August.

Sugar prices have jumped by more than 3% in a fortnight to their highest level in six years, traders and industry officials said.

"Sugar mills are worried that production could fall sharply in the new season because of drought. They are not willing to sell at lower price," Ashok Jain, president of the Bombay Sugar Merchants Association, told Reuters.

Sugar prices rose to Rs 37,760 rupees per metric ton on Tuesday (September 5). Indian prices are still nearly 38% lower than the global white sugar benchmark.

Sugar prices could rise further in the coming months as stocks are falling, and the peak festive season is approaching, a Mumbai-based trader told Reuters.