Author: Michael Ferrari, PhD
VP, Applied Technology & Research

Several posts over the last couple of months have noted that while the Indian monsoon is overall close to normal this year, the sugarcane growing regions throughout the north (U.P., Bihar) have been moisture deficient, and the market has not yet taken notice.  As a whole, India’s seasonal weighted rainfall is 4% below normal, but when we look at the distribution, the northeastern region is still very far below where they need to be at this time of year.  See the weekly map below from the Indian Met Department’s website showing the deficiencies. 

While there is still time for recovery, the current pattern is certainly stressing the crop and the widespread projections among analysts for a healthy producing season, particularly for the key producing areas of Uttar Pradesh, are likely too high.  Most of the consensus around India’s sugar production for the 2010/11 sugar year (Oct/Sep) is centered around a number of 24-25 mmt, with some industry estimates as low as 23 mmt, and others as high as 28 mmt.  The Weather Trends outlook for India’s 2010/11 has been in the 22.5-23 mmt range for several months now (with some additional downside risk) and unlike most official estimates, this outlook has not changed.  This estimate has figured in higher total India year-over-year production, with the positive factor coming from the southern growing regions; the outlook figured in dryness problems in the north, which are materializing, and the view looking ahead is not as optimistic as most in the industry.

Early market spot raw sugar futures (OCT-10) are currently trading slightly up at 18.29 (+0.16%).