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India's sugar industry is witnessing a notable decline in production for the ongoing sugar season year 2025 (SSY25), with overall output expected to fall below 27 million metric tons (MMT), a sharp drop from 31.8 MMT last year, according to a report by Centrum.
As of February 15, 2025, sugar production stands at 19.77 MMT, reflecting a 12 per cent decline compared to the same period in the previous season. This downturn is mainly due to higher sugar diverted for ethanol production, reduced cane availability, and lower recovery levels. The state-wise data highlights Maharashtra as the worst-hit, with sugar production dropping 14 per cent YoY. Karnataka saw a 13 per cent decline, while Uttar Pradesh recorded an 8 per cent drop. Notably, Karnataka's cane availability fell 22 per cent YoY in the last fortnight, causing a sharp reduction in crushing volumes. While Maharashtra witnessed a 7.8 per cent YoY decline in cane availability, UP remained relatively stable with a 1.4 per cent increase for the season. The declining cane supply has forced several mills to halt crushing operations earlier than expected. The number of mills that have stopped operations surged from 23 on January 31 to 51 as of February 15. Total sugarcane crushing for SSY25 has dropped to 218 MMT, down 4.5 per cent from 228 MMT in the previous season. In a recent policy update, the government reversed the price hike for Food Corporation of India (FCI) rice, setting it at Rs 22.5/kg. However, the ethanol price revision has disappointed industry players, as only the C-heavy (CH) route saw a 3 per cent price increase, contrary to expectations of a broader hike covering B-heavy (BH) and direct ethanol production routes. Industry experts suggest that mills may prioritize CH-based ethanol production, potentially leading to higher sugar output and lower ethanol production. Despite the decline in production, sugar prices remain stable and remunerative. In Uttar Pradesh, sugar prices are hovering around Rs 41,000 per ton, while Maharashtra is witnessing prices above Rs 37,500 per ton. These favourable price levels are expected to boost profitability for sugar mills in Q4FY25 and FY26. Additionally, the government's recent approval of a 1 MMT sugar export quota could further support domestic sugar prices, aided by the weak rupee and rising global sugar prices. (ANI)
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