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ISMA estimates a reduction in sugar production for 2019-20. Commodity tips

Uploaded Date 07-Nov-19
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India is one of the largest producers of sugar in the world. The sugar output is nevertheless likely to hit a 3 year low this season. This year, flooding has affected the areas that had earlier stayed unaffected by flooding.


Typically, India is considered to be at par with Brazil as the no.1 sugar producer. The production of the commodity may nevertheless slide downwards to 26.85 million metric tons. The stats are for the year which began on October 1st.


Recent floods render implications over sugar production estimates for 2019-20


This is a reduction from an estimate presented earlier, which stood at 28.2 million tons. The information is conveyed by the Indian Sugar Mills Association (ISMA). It is noteworthy that in 2018-19, India had produced a record 33.2 million tons of sugar.


An earlier estimate of 28 million metric tons had been released on 1st June 2019 by ISMA, as defined by satellite mapping.


The second section of satellite imagery was obtained in the latter part of October 2019. Using the data, ISMA reduced the sugar production estimate to 26.85 metric tons. This was because, as a result of flooding, sugarcane crop acreage would be 483.1 million hectares. This is 12% below cane acreage for 2018-19, which was 550.2 million hectares on a pan India basis.


The revised set of sugar production estimates took into account several metrics such as rainfall, cane drawal, recovery, yields, and sugarcane acreage, and the changes they came across owing to flooding. The figure for the net estimate was hence lower, as compared to what it used to be 4 months back.


The reduction in sugar production, which is likely for the year, will reflect over the nation’s sugar stockpiles. This is even while in the prior year, the production was at record high levels. This year, the reduction in production will be in the line of 19%, owing to flooding.


Over the past year, sugar futures have fallen by 5%. India is in the process of boosting exports, even as it is coming across criticism by producers because the outflow is depreciating the prices of sugar.


The figure for total sugar production for the year 2019-20 is likely to be pretty close to 26 million tons, in case a section of cane juice and B-heavy molasses is used to make ethanol, as specified by the ISMA statement.


Across the year, sugar production in India has been affected by adverse weather. To start with, the monsoon season was delayed in India. The rainfall was more intense and led to flooding, primarily in the states of Maharashtra and Karnataka. They are India’s second and third-largest states, respectively, in terms of sugar production.


Maharashtra and Karnataka are the most adversely affected states


In the initial sugar production estimate put forth by ISMA, cane acreage for Maharashtra was lower by 30%, as resulting from draught that took place last year in Solapur and Marathwada.


In September 2019, important cane growing areas such as Pune, Satara, Sangli, and Kolhapur were affected by floods. Prolonged water-logging worked towards destroying cane in certain areas. A few of the areas similarly were partially affected in terms of yield and recovery.


Henceforth in ISMA’s second sugar production estimates released in the latter part of October 2019, cane acreage for Maharashtra was further dropped to .77 million hectares, as compared to the data reported four months earlier.


The estimate for cane acreage now stands at 33% below the last year’s figures of 1.15 million hectares.


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