KARAD, India - India is likely to produce 7.4 percent less sugar than forecast earlier as mills are reporting a sharp drop in sugar cane yields due to a drought and white grub infestations in key growing areas, a senior industry official told Reuters.
The drop will reduce exports from the world's second-biggest sugar producer and likely help support global prices that have fallen 17 percent so far in 2018.
"Almost all mills have started operations and are reporting lower cane yields," said B.B. Thombare, president of the Western India Sugar Mills Association.
"Accordingly, we have to revise our production estimates."
India's sugar production could fall to 30 million tonnes in the 2018/19 marketing year that started on Oct. 1, down from an earlier estimate of 32.4 million tonnes and the previous year's production of 32.5 million tonnes, Thombare said.
Other trade bodies cut production estimates to between 32 million and 32.4 million tonnes last month, from first estimates of around 35.5 million tonnes.
Though the marketing year starts in October, most Indian mills start operations in November.
"We irrigated on time, applied fertilisers like last year, but still yield was 30 percent lower this year as scanty rainfall hit productivity," said Dnyaneshwar Bagal, a farmer from the western state of Maharashtra, whose cane was harvested earlier this month.
Maharashtra, India's second-biggest sugar producer, received 23 percent less rainfall than normal this year during the June-September monsoon season, according to state government data.
Some fields were also hit by infestations of white grubs that rapidly spread due to the lower rainfall, said Balasaheb Patil, chairman of the Sahyadri co-operative sugar factory in Maharashtra.
"Grubs were eating cane roots. So yield of even the ratoon crop will be lower next year," Patil said.
The ratoon crop is the root stub of cane after the first harvest that usually remains in the ground for a second harvest.
Cane yields are lower even in the northern state of Uttar Pradesh, the biggest sugar producer for India, said a senior official with a private sugar mill.
In Uttar Pradesh, per-hectare cane yields are lower, and the cane also contains lower sugar than last year, the official said, who was not authorised to speak to media.
The concerns over sugar production has been prompting some mills to go slow on exports.
India has asked sugar mills to export 5 million tonnes of sugar to trim inventories and has also announced export incentives.
"In the last few days, mills have become reluctant to sign new export deals. They are expecting an improvement in local prices," said a Mumbai-based dealer with a global trading firm.