May 31, 2017 / 8:03 AM / 3 months ago

Keeping sweet: India sugar output expected to jump on decent monsoon

FILE PHOTO: A labourer carries a sack filled with sugar in a store at a wholesale market in Kolkata, India, February 15, 2016.Rupak De Chowdhuri/File Photo

MUMBAI (Reuters) - India's 2017/18 sugar production will likely jump a quarter from the previous year to 25 million tonnes as decent monsoon rains are forecast, the head of an industry body told Reuters.

That rebound in output to volumes near consumption levels could sap demand for imports from the world's biggest consumer of the sweetener, dragging on international prices that are already near their lowest in over a year.

India was forced to import 500,000 tonnes of sugar in the 2016/17 crop year ending Sept. 30 after a strong El Nino weather pattern prompted severe drought in 2015.

"Local supply will be enough to cater for demand. We don't need imports anymore," Prakash Naiknavare, Managing Director, National Federation of Co-operative Sugar Factories Ltd, said on Wednesday.

India's monsoon, which is forecast to deliver normal rainfall in 2017, lashed the country's southwest coast on Tuesday, two days ahead of usual.

"Next season, we are expecting a sharp rebound in Maharashtra's production due to good monsoon rains," said Naiknavare.

The western state of Maharashtra is the nation's No.2 sugar producer. A sharp drop in production there due to back-to-back droughts drove the country to allow duty free imports of the sweetener.

Maharashtra's production fell 50 percent from a year ago to 4.18 million tonnes in 2016/17, but next season's output is expected to surge 62 percent to 6.8 million tonnes, Naiknavare said.

"Good rainfall last year allowed farmers to increase area under sugarcane. This year as well we are expecting ample rains that will boost yields."

Output in the northern state of Uttar Pradesh, the country's top sugar producer, is expected to rise 5 percent next season to a record 9.2 million tonnes, Naiknavare said.

Last week, India raised by nearly 11 percent the price sugar mills must pay to cane growers in the 2017/18 season.

That price rise and the good monsoon rains are also expected to lift the amount of land devoted to growing sugarcane for the 2018/19 season, said Sanjeev Babar, managing director of the Maharashtra State Co-operative Sugar Factories Federation.

"Production in 2018/19 will be higher than the next year. The rise depends on planting in the next few months," he said.

Cane is a perennial crop harvested 10-16 months after planting.

Reporting by Rajendra Jadhav; Editing by Joseph Radford

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