Sugar Production in India May Surge to Eight-Year High on Yields

(Bloomberg) – Sugar output in India, the world’s biggest producer after Brazil, will climb to the highest level since 2007 as cane yields increase, a mills’ group said.

Production may total more than 27 million metric tons in the year that began on Oct. 1, the Indian Sugar Mills Association said in an e-mailed statement on Thursday. That would be the highest since 2006-07 and compares with 24.4 million tons last season, data from the association show. Output jumped 14 percent to 26.4 million tons by April 15, it said.

Rising supplies from India to Thailand threaten to widen a global surplus for a fifth year and pressure prices that have fallen 10 percent in New York this year. Global production in the year ending Sept. 30 will exceed demand by 620,000 tons, leaving record stockpiles of 79.89 million tons, or almost enough to supply the world’s top seven consuming countries, data from London-based International Sugar Organization show.

“Higher cane yields in Maharashtra and an increase in sugar recovery in Uttar Pradesh are helping production,” Abinash Verma, director general of the association, said by phone from New Delhi on Thursday.

India’s sugar stockpiles will expand to more than 9 million tons by the end of September from 7.5 million tons a year earlier, the association said. The government should buy 3 million tons from mills to absorb the surplus and allow domestic prices to improve, it said.

Sugar prices have fallen below the cost of production across India to a seven-year low due to weak demand and mounting stockpiles, the association said. Mills owe 193 billion rupees ($3 billion) to farmers, as much as 35 percent of the total money payable to the growers this season, the association said.