The country’s sugar output rose more than 16% by May-end from a year before to stay at an eight-year high, further worsening a glut in the market.
India produced 27.96 million tonnes up to May 31, compared with 24.05 mt a year earlier, according to the Indian Sugar Mills Association (ISMA). Although bulk of the producton is over, 19 mills are still operational. The production this year is the highest since that of 28.4 mtin 2006-07.
The higher-than-expected output has further aggravated an over-supply in the market and continues to pressure ex-factory sugar prices, which are already at six-year lows in key producing regions. The market has already been awash with supplies, thanks to the fifth straight year of surplus sugar production through 2014-15. Maharashtra produced 10.48 mt of sugar until May 31, up over 36% from the corresponding period last year, as per the ISMA data.
Stocks neras six-year peak
The country’s sugar stocks at the end of this season in September is estimated at 10.30 mt, the highest in the last six sugar seasons. Sugar prices in the domestic market are highly depressed and are hovering aorund six-year lows.
“The government should immediately come out with some substantial assistance for sugarcane farmers and the sugar industry, otherwise many sugar mills cannot start their operations in 2015-16 sugar season, and sugarcane will remain unharvested in the fields,” ISMA has cautioned.