The Indian Sugar Mills Association Monday revised down its forecast for domestic sugar production by 800,000 mt to 30.7 million mt, a drop of 5.5% on the year, taking into account 500,000 mt diverted to fuel ethanol production through 'B' heavy molasses.
Producing ethanol through 'B' heavy molasses -- allowed by the government for the first time this season -- has a direct impact on sugar production as it is made directly from cane juice. Previously ethanol was produced from 'C' heavy molasses, which never had a major impact on sugar output.
In July 2018, ISMA forecast 35 million mt for the 2018-19 campaign, before revising it to 31.5 million mt in October following "untimely rains and pest attacks" in some states.
However, a source urged caution pointing out that at the same point last season, ISMA forecast 26.1 million mt, and the end of season production totaled 32.5 million mt.
The rate of sugar production was 8.3% ahead of last year, 14.7 million mt were produced between October 1 and January 15, due to the season starting earlier.
In regards to exports, ISMA forecasts 3 million-3.5 million mt during the campaign, against the mandatory quota of 5.0 million mt, "unless the export quota is backed up by the Government with some force or penalty for the sugar mills who are not exporting against their quotas."
Both London white and New York raw sugar futures have been supported since the New Year as analysts continue to revise down their global production estimates for 2018-19, with some sources forecasting a deficit for the 2018-19 campaign.
