Late rains may cut sugar output in India

PALSHI: Late monsoon rains over two main cane growing areas in major sugar producer India may reduce their 2012-13 output by some 19 percent, but the overall crop is likely to see a surplus due to increased output from another region, officials said.

New York raw sugar futures closed at a 2-1/2-month high on Monday, underpinned by adverse weather in the world's biggest and second-biggest producers, Brazil and India.

The cane-growing central region of western Maharashtra state has received 35 percent less rainfall than normal since the monsoon season began on June 1.

This dryness is set to trim output in the area and in neighbouring Karnataka, the country's third-biggest sugar producer.

To cut their losses, some farmers are also diverting cane into fodder, further reducing output.

Maharashtra's sugar output may now fall nearly 19 percent to 7.3 million tonnes in the 2012-13 season starting on Oct. 1, said a senior official at the state's Sugar Commissioner's office, who declined to be named because he is not authorised to speak to the media.

Karnataka's sugar output may also fall by a similar rate to 3 million tonnes from 3.7 million tonnes in the current year, according to industry body the Indian Sugar Mills Association (ISMA).

India, however, will manage to produce a sugar surplus in 2012/13, due to an increase in the sugar output from Uttar Pradesh, the second biggest growing state, ISMA estimates.

Last week, Farm Minister Sharad Pawar said a delay of 60 days in watering affects yields and sugar percentage in cane.

Water levels in India's main reservoirs have also fallen to 16 percent of capacity as on July 5, compared to 29 percent during the same time last year.

Farmers in Maharashtra have so far diverted more than 100,000 tonnes of cane for fodder and may divert more, depending on the rains over the next two months, said a senior official at the state's farm ministry who declined to be named.

Cane is a water-intensive crop and is harvested 10 to 18 months after it is planted.

India is expected to produce 26 million tonnes of sugar in the 2011-12 year, or about 4 million tonnes more than its annual demand. Around 3 million tonnes of exports have already been approved.

If the dryness persists, the 2013/14 sugar crop may be affected as farmers don't have enough water to plant long-duration varieties, said an official at the Sahyadri Co-operative Sugar Factory in Maharashtra.