The Indian Sugar Mills Association (Isma) on Tuesday cut its output forecast to 203 lakh tonne for the current marketing year through September from 213 lakh tonne announced in January on lower-than-expected output in drought-affected Maharashtra and Karnataka. A forecast in September 2016 had projected 234 lakh tonne of sugar output.
Isma also revised downwards the consumption estimate for 2016-17 by 2-4 lakh tonne citing lower sales so far. Following the revised estimate, the traders have alleged that the millers’ body is underestimating demand to show adequate availability in 2016-17 after projecting an ambitious production level earlier this year.
Sugar traders and refiners have been projecting a massive shortage of sugar in the domestic market and demanding the abolition of a 40% import duty to tide over the shortfall. The millers, however, have been maintaining that although production will take a hit, plentiful carry-forward stocks from 2015-16 will more than offset the shortfall and there is no need to scrap the import duty.
Isma’s latest forecasts represent a 19% decline in production and a 3-4% fall in consumption from the actual levels of 2015-16. The food ministry, however, last month retained a more optimistic forecast of 225 lakh tonne of production for 2016-17, maintaining that there was adequate supply of sugar. However, it could revise the sugar production data in the coming months, if required, official sources had said.
“Considering the opening balance of 77.5 lakh tonne, (which has been reported by all sugar mills to the government) and considering an estimated sugar production of 203 lakh tonne in the current season and consumption of 238-240 lakh tonne, the closing balance in the current season would be 40-42 lakh tonne. This balance will be enough to meet the domestic requirement till almost end of November 2017,” Isma said on Tuesday.
Isma says the consumption estimate has been revised down for 2016-17 in view of a drop of 7.25 lakh tonne in actual sales from October through January this season, compared with a year earlier, following demonetisation.