Almost 5 months into 2019 and we are already getting hit with loads of uncertainties. First, we have to deal with the anticipation of the ruling government, and now we have to overcome the concerns regarding adequate rainfall this year.
Until now, the signs are not positive enough to indicate sufficient rainfall and it will affect crops across the country. Maharashtra, being the largest sugar producing state in India, is already worried about it’s annual sugar output which is expected to decline by 15% - 20% in October and November (the crushing season). Scarcity of rainfall and severe drought across the region has been a major cause of decline in production as farmers in the state have started uprooting sugarcane to feed their animals.
The drought has affected crops as well as animals who are now unable to get adequate water and food. The intense heat in the summer season has also damaged the crops which has further contributed to the scar city of adequate produce. This scenario has instilled lack of confidence in the farmers who have now started shifting to other crops like soyabean and pulses to ensure income and sustain themselves during this difficult period.
“Maharashtra hit a record sugar production surpassing the benchmark 10 million tonnes in the crushing season 2018-19. But, drought and crop diversion are set to reduce its overall cane sowing this year. We feel, total sugar output may remain 15 – 20 per cent lower at 8-8.5 million tonnes in sowing season (SS)2019-20,” said Prakash Naiknavare, managing director, National Federation of Co-operative Sugar Factories.
“The field reports from Maharashtra suggest that sugarcane planting in most of the regions in Maharashtra for harvesting in next 2019-20 season is significantly lower than the sugarcane harvested in the current season. With lesser number of sugar mills working as of now, sugar production in the balance part of the current season will be much less than what was produced from May 1, 2018 to September 30, 2018 last year,” said Abinash Verma, Director General, ISMA in a recent release.
The year 2018-19 was the most productive year for Maharashtra in terms of sugar output wherein the produce was reported to be around 10.07 million tonnes. However, the situation seems to be different this year.
A unique issue that has been identified with respect to sugar output is the imbalance in demand to supply ratio. As of now, the demand of sugar is lower than is availability and mills are not scouting for warehousing and storage to survive the monsoon.
Although Maharashtra is the largest sugar producing region, the weather conditions across the country will have a significant impact on the overall output this year wherein we might see the expected output of 33 million tonnes not being met. Will this shortage also have an impact on the commodity market? Only time will reveal the true outcomes.