During the first half of January India had a production of 3.08 million tons of sugar, down 4.01% from 3.21 million tons produced in the immediately previous fortnight, the second half of December. In the annual comparison, we can see a stronger fall of 13.54%, compared to 3.56 million tons produced during the same period of the previous year.
The 13.54% drop in the annual comparison of the first half of January contrasts with the stronger annual drop seen in the immediately preceding fortnight, the second of December, when, until then, the volume produced was 21.95% below the same moment of the previous year. With this, the biweekly data for the first half of January are those with the second lowest decrease in the season, only losing to the first half of December, when production had hitherto been 12.44% below the same period in the previous year.
In the season thus far, India already has a supply of 10.88 million tons, a volume still 26.18% below the accumulated production of 14.73 million tons of the season until the same moment of the previous year. In the accumulated volume until the previous fortnight, the gap of the current crop compared to the previous one hit 30.21%. In this context, the volume of 3.08 million tons produced in the first half of January was 13.42% above the average production of the current crop, which is currently at 2.72 million tons. The average production of the crop itself increased by 4.68%, by leaving from 2.59 million tons to the current level of 2.72 million tons between the second half of December and first half of January.
Considering the expected production of 31 million tons estimated by SAFRAS & Mercado for the end of the 2019/20 local season, we can see that the current crop, accumulated at 10.88 million tons, is 35.10% complete, down 7.87% from the level of 42.97% observed in the same moment of the previous year, when the total supply at the end of the season was 34.30 million tons.
SAFRAS & Mercado still maintains the perspective that the most recent data from the United States Department of Agriculture for the 2019/20 crop at 29.3 million tons will be positively adjusted to 31 million tons in both the May and November 2020 reports, similarly to what was seen in the 2018/19 season, which was adjusted from 33 to 34.3 million tons between the May and November 2019 reports due to the government’s lack of control over the 35 million local sugar producers. The lack of political will to cancel subsidies must also be a vector that keeps local production steadily high. The question of a possible agreement in the biofuel industry between Brazil and India (should it actually occur and result in concrete measures) is still clearly in embryonic stage and cannot be measured or projected in the face of possible adjustments in the sugar supply of India over the 2019/20 season.
Although SAFRAS & Mercado estimates sugar production at 31 million tons in India at the end of the current 2019/20 crop, USDA points to a volume still at 29.3 million, with the Indian Sugar Mills Association pointing to a volume of 26.85 millions. In turn, the National Federation of Cooperative Sugar Factories indicates the volume of 26.30 million. The country’s Ministry of Agriculture points to an expected volume of 28 to 29 million tons, while Rabobank expects a supply of 28.1 million tons. Despite this, SAFRAS & Mercado has already warned its clients that Indian traders and exporters are concerned over the high level of water reservoirs (at the highest levels in 10 years), which must increase cane production, as well as with the slowdown of the country’s GDP, which must drive domestic demand to a standstill and reinforce the reading of an increase in production to the level of 31 million tons at the end of the current 2019/20 local crop.