India’s mills have produced 17.6m tonnes of sugar so far this season, down 800k tonnes from 2018/19’s record pace.
We think India will produce 31.5m tonnes of sugar in total this season, down 1m tonnes from our initial estimate.
This is because the mills, swayed by new government incentives, will now divert more sucrose towards ethanol production.

Uttar Pradesh Produces Less Sugar This Year

Uttar Pradesh has produced 5.4m tonnes of sugar so far this season, down 100k tonnes year-on-year.
We think the mills will produce 12.2m tonnes of sugar overall, down 400k tonnes from year-on-year.
The is because the region is set to produce 1.3 billion litres of ethanol in this season, up 300m litres from 2019/20.
In order to do so, the mills must divert more sugar and molasses towards ethanol production in the coming months.

Maharashtra Must Also Increase its Ethanol Diversion

Maharashtra has produced 6.4m tonnes of sugar so far this season, up 2.9m tonnes year-on-year.
We think the mills will produce 9.5m tonnes of sugar in total, up 3.3m tonnes year-on-year.
This comes as farmers planted more cane 2019/20 and achieved stronger agricultural and sucrose yields after the good monsoon.
However, Maharashtra hopes to produce 1.1 billion litres of ethanol this season, meaning it will struggle to break its previous sugar production record of 10.7m tonnes.
This is because it will divert at least 400k tonnes of sugar towards ethanol production.

Karnataka has 3.4m tonnes of sugar so far this season, up 500k tonnes year-on-year.
We think the mills will produce 4.7m tonnes of sugar in total, up 400k tonnes year-on-year, as last year’s strong monsoon also helped Karnataka’s agricultural and sucrose yields.
However, its ethanol diversion will still need to increase from 206m litres to 379m litres this year to hit the Government’s target.

The mills in Uttar Pradesh, Maharashtra and Karnataka must produce 3.3b litres of ethanol this season if they want to hit the target set by the Government.
In order to do so, they must divert 1.2m tonnes of sugar towards ethanol production.
Uttar Pradesh is pushing on at a good pace, but Maharashtra and Karnataka both have room for improvement as they aren’t currently making full use for their ethanol production capacity.