Sugar output from India's biggest cane growing state is likely to be lower than a targeted 6 million tonnes this season due to crop shortage, an official said, possibly jeopardising further exports from the world's number 2 producer of the sweetner.
A senior official of Uttar Pradesh state, which accounts for about a quarter of total sugar output, told Reuters on Wednesday the region had produced 5.85 million tonnes of sugar since October and was unlikely to reach a downwardly revised target of 6 million tonnes.
India, the biggest sugar producer after Brazil, said in March it would allow 500,000 tonnes of sugar exports, the first unrestricted overseas sales of the sweetener in three years and is expected to start shipments by the end of this month.
The Indian government expects 2010/11 sugar production at 24.5 million tonnes, against a domestic demand of 22.5 million tonnes - leaving it room, potentially, for more overseas sales. But lower output from Uttar Pradesh could hit the country's exports and that could rattle global markets, where prices are currently underpinned by tight supplies and low stocks.
A forecast from leading weather experts is expected on Friday from a conference in Pune while the government's first official forecast will be on April 19. Sugar exports in India, much like exports of other key commodities such as wheat, are largely a political decision given high food inflation and hefty food subsidies.
Crushing in Uttar Pradesh is almost over and 114 of the state's 125 mills have shut down. The state's sugar output forecast this season was revised to 6 million tonnes from an earlier estimate of 6.2 million tonnes after prolonged monsoon rains damaged crops and reduced yield.
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