The decline in output from a year earlier and trade barriers mean Indian growers still expect higher returns even as global costs plunge. Farmers anticipate a 22 percent gain in average cane prices this marketing year, the SGS survey showed. Sugar futures traded in Mumbai climbed 21 percent in the past year and touched 3,672 rupees per 100 kilograms (30.7 cents a pound) in August, the highest level in more than 18 months.
“A rally in local sugar prices and expectations of better cane returns encouraged farmers to plant more,” said Mark Oulton, the market research director for SGS in Wilkes-Barre, Pennsylvania. “The crop was profitable.”
While farmers increased the amount of land planted with cane by 9.8 percent this year, yields may drop 2.8 percent, the survey showed. The delayed monsoon damaged crops and reservoirs supplying irrigation had below-average water levels. About 19 percent of the cane was in poor condition this year, from 6 percent the previous season, the survey showed.
The harvest in Maharashtra, the biggest sugar-producing state, may decline 5.7 percent, with 3 percent of the crop reported to be in good condition, from 38 percent a year earlier, according to the survey. That contrasts with Uttar Pradesh, the largest grower of cane, which is expected to reap almost 13 percent more. About 34 percent of fields were in good condition, from 6 percent the previous season.
“There are no signs of the global surplus disappearing any time soon,” said Eugen Weinberg, the head of commodity research at Commerzbank AG in Frankfurt. “Supplies are very comfortable.”