Sugar factories in Uttar Pradesh expect to start cane crushing for the 2012-13 season by the middle of November.
“Crushing in UP will start around Diwali,” said Abinash Verma, Director-General of the Indian Sugar Mills Association (ISMA).
In Maharashtra, the State Government wants the mills to begin cane crushing from November 1.
Factories in southern parts of Karnataka and Tamil Nadu have already started crushing for the new season, he said.
Largest producer
UP is set to emerge as the largest producer of the sweetener in 2012-13 as erratic monsoon has hurt cane crop in Maharashtra.
ISMA has projected an eight per cent drop in the country’s sugar output at 24 million tonnes (mt) for 2012-13, down from 26 mt in the previous year.
Sugar Output
Production in UP is expected to be 13.7 per cent higher at 7.9 mt on higher cane acreage and better yields aided by good rains.
Last year, the State had produced 6.97 mt of sugar.
In Maharashtra, the production is expected to decline to 6.5 mt, down from 8.95 mt last year, according to ISMA estimates, as dry spells had hurt the crop forcing farmers to divert cane to fodder in several areas.
ISMA expects the opening sugar balance for the new season starting October 1, at six million tonnes.
On Thursday, the Government allowed sugar mills to sell four million tonnes of the sweetener in the open market in October and November.
Prices
The open market allocation for these two months is marginally higher than the monthly average of around 1.7 mt.
The higher quota, mainly to meet the peak demand during Dasara and Diwali festivals, is expected to help stabilise prices that had seen a rally in recent months.
Sugar prices had gained by about 30 per cent over the past one year on output concerns in the 2012-13 season.
Govt allocation
A Food Ministry statement said sugar mills have to sell the entire open sale quantity of 4 mt within these two months.
Further, it would be mandatory for mills to sell at least 45 per cent of the quota each month, it said.
The rest 10 per cent could be sold anytime till November-end, it said.
The Government has also released a levy quota of 3.96 lakh tonnes during these months.
The levy quota for October is pegged at 2.13 lakh tonnes and for November at 1.83 lakh tonnes for the direct allottee States.
The Government fixes the quantity of both levy and open sale quota.
Following the announcement, sugar prices eased marginally in both spot and futures market.