Over three dozen sugar mills in India's leading cane-producing states halted operations last week, nearly two months earlier than usual, due to lower cane supplies caused by adverse weather, industry official told Reuters.
These early closures suggest India will produce less sugar than initially estimated. Production concerns are lifting local sugar prices and prompting mills to seek higher prices for overseas sales of their limited export quota.
The slower pace of shipments from India, the world's second-biggest sugar producer, will support global prices.
Indeed, there was a big jump in mill closures this year.
At least 37 mills in the western state of Maharashtra, neighboring Karnataka, and the northern state of Uttar Pradesh have closed operations, said a senior industry official, who declined to be named.
During the same period last year, only 11 mills had closed.
"Last year's drought hit cane yields hard. In many districts, supplies ran out, forcing mills to shut down early," B.B. Thombare, president of the West Indian Sugar Mills Association told Reuters.
Many Maharashtra mills are struggling to get enough sugarcane, operating at half their capacity, and will likely close for the season by the end of this month, he said.
India's sugar output during the 2024-25 marketing year, ending in September this year, may fall to 27.27 million metric tons, down 14.7% from a year ago, the Indian Sugar and Bio Energy Manufacturers Association estimated last month.
However, dealers with global trade houses predict even lower production, given the pace at which mills are closing.
"We estimate that production could fall to around 26 million tons," said a Mumbai-based dealer with a global trade house.
The early closure of mills, along with permission to export 1 million metric tons of sugar, has lifted local prices by 10% in a month.
"The rise in local prices has improved mills financially. They are seeking 45,000 rupees per ton or more to supply sugar for exports," said a New-Delhi based dealer with a global trade house.
Exports are slow because mills are reluctant to sign contracts immediately, hoping prices will rise further, he said.
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