The country is likely to produce 23.4 mt sugar in 2016/17, down about 7% from a year earlier as back-to-back droughts ravaged cane crops in the top producing western state of Maharashtra.

Sugar production in India has increased marginally this season due to early crushing in states like Uttar Pradesh and Karnataka. As per ISMA, Indian sugar mills produced 2.74 mt of sugar between Oct. 1 and November. 30, up 17% compared to last year same period.

During 2016-17 SS, the states of Maharashtra and Gujarat have produced lower sugar as compared to last year till the end of November 30 while Uttar Pradesh and Karnataka produce more sugar than the last year. The sugar dispatched from sugar mills in first month of current season i.e. October 2016, was 20.64 lt as compared to 22.99 lt dispatched in October 2015, last year, down 2.35 lt.

Moreover, government is looking to enhance domestic supplies by reduce import duty if the prices domestic market increase. Central government is exploring the option of lowering the 40% import duty on the sweetener in its raw form.

Sugar prices to trade sideways on anticipation of cane scarcity in Maharashtra but production in UP is going to be good this season. However, there are also reports of easing supplies in the coming months as crushing season is going on in all the sugarcane growing states. Government has extended stock limit on sugar till end of the crushing season to keep the supply sufficient.