Sugar output may rise 12% in sugar year 2021 at 30.5 million MT

Aided by an increase in sugarcane availability in Karnataka and Maharashtra during the sugar year (October to September) 2021 (SY2021), the domestic production of sugar is set to go up by 12.1% year-on-year in SY2021.

After adjusting for the impact of the diversion of B-heavy molasses and sugarcane juice for ethanol manufacture, the sugar production for SY2021 is expected to touch 30.5 million metric tonnes.

According to a calculation by rating agency ICRA, the closing stocks for SY2020 is pegged at 11-11.5 million metric tonnes. The consumption of sugar during SY2020 is projected at 25 million metric tonnes, a decline of 3.8% Y-o-Y and exports of 5-5.5 million MT. This along with higher sugar production for SY2021 is likely to result in domestic sugar availability of around 42 million MT.

The production is likely to increase in SY2021 because of higher production in Maharashtra and Karnataka in SY2021, which was adversely impacted in the previous year due to drought. In addition, heavy rainfall and water logging during the last year (August-September 2019) adversely impacted the cane crop in a few regions of Maharashtra and North Karnataka for SY2020.

Without considering the impact of the diversion of B-heavy molasses and sugarcane juice for ethanol manufacture in SY2021, the production is expected to be around 32 million MT. In Maharashtra, the production is expected to increase by 64% Y-o-Y at 10.1 million MT and in Karnataka by 26% Y-o-Y to around 4.3 million MT in SY2021.

In UP, the country’s largest sugar producer, the production is likely to decline by 3% Y-o-Y to 12.3 million MT.

In SY2020, the production was higher by around 0.5-0.6 million MT than anticipated because of the cane which was generally used by the local gur and khadsari manufacturers, got diverted to sugar mills with the former’s operations prematurely shut due to the lockdown, ICRA said.

“The domestic sugar consumption was adversely impacted by the nationwide lockdown owing to Covid-19 pandemic due to loss of demand on account either closure or limited operations of several beverage/food manufacturing units during April-May 2020. With the easing of lockdown rules, the consumption is back to pre-Covid levels in June-July 2020. While we expect a decline in the sugar consumption in SY2020, the same is likely to go back to 26 million MT levels in SY2021,” Sabyasachi Majumdar, Senior Vice President & Group Head, ICRA Ratings said.