Sugar Giant India Set to Boost Output as Lockdown Solution Found

(Bloomberg) -- India will likely produce more sugar than expected this year as farmers divert more cane to mills that are still open during the nationwide lockdown.

The Indian Sugar Mills Association will likely raise its forecast for output to 27 million tons in the year that began Oct. 1, according to a person familiar with the matter. That compares with an earlier estimate of 26.5 million tons.

The increase is because farmers in the biggest cane-producing state of Uttar Pradesh have boosted supplies to sugar mills instead of selling to makers of jaggery, a local sweetener, that have been shuttered in the lockdown, said the person, who asked not to be identified discussing a private matter.

The Indian Sugar Mills Association’s spokesperson wasn’t immediately available to comment.

Higher than anticipated output will add to India’s record stockpiles as domestic consumption sinks, potentially leading to more exports and pressuring global prices. India, which vies with Brazil as the world’s biggest producer, had been criticized by other nations for flooding global markets after the country produced a record 33.2 million tons last year.

Though the cane crushing season is nearing its end in India, the shuttering of sugar mills in Uttar Pradesh has slowed down a bit due to the increase in cane supplies and some factories may operate until the end of May. As many as 75 mills were crushing cane in Uttar Pradesh as of April 30, compared with 68 mills a year earlier, according to the Indian Sugar Mills Association.

Sugar mills had about 14.6 million tons stockpiled as of Oct. 1, enough to meet domestic demand for more than six months. This year’s exports may exceed 5 million tons by the end of September, helped by demand from countries including Iran and Indonesia, according to Abinash Verma, director general of the sugar association.

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