Adverse weather hits Indian cane crop and curtails sugar output

A sample of sugar crystals are seen on the desk of a trader at a wholesale market in Kolkata

By Rajendra Jadhav

MUMBAI (Reuters) - India is likely to produce 34.3 million tonnes of sugar in 2022/23, down 4% from the previous forecast, after sugar cane yields in key producing states were hit by adverse weather, a senior industry official told Reuters on Tuesday.

Lower sugar output could limit exports from the world's second-biggest exporter, lifting global prices and allowing rivals Brazil and Thailand to increase their shipments.

"Excessive rainfall and cloudy weather in September and October curtailed sugar cane's vegetative growth. Cane yields are lower than the last year," Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories Ltd, told Reuters.

India, the world's biggest sugar producer, had produced a record 35.9 million tonnes of sugar in the previous season, which ended on Sept. 30.

Maharashtra, which accounts for more than a third of the country's sugar output, is expected to produce 12.5 million tonnes of sugar in the marketing year that began on Oct. 1, down from an earlier forecast of about 13.8 million tonnes, Naiknavare said.

"There might be further reduction in the production estimate, but there is no possibility of upward revision," Naiknavare said.

The revised estimate of 34.3 million tonnes is "very optimistic" and production could drop below 33 million tonnes, said one Mumbai-based dealer at a global trading house.

Reuters was first to report in December about the likely drop in production.

New Delhi has allowed mills to export 6.15 million tonnes of sugar in the first tranche of this year's exports. The Indian Sugar Mills Association expects India to earmark up to 4 million tonnes of sugar for overseas shipment in the second tranche.

The government is unlikely to allow additional exports because it will first try to fulfil local demand, the dealer said.

(Reporting by Rajendra Jadhav; Editing by Christopher Cushing and David Goodman)