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India sugar industry wants more sugar used for ethanol as supply improves

(Reuters) - The Indian sugar industry urged the government to allow more sugar to be diverted for the production of ethanol, citing improved supply after unseasonable rainfall in key cane-growing states in November and December.

The world's second-largest sugar producer last month capped the amount that could be diverted for ethanol in the current season to end-September at 1.7 MMt, after below normal monsoon rains between June and September hit the cane crop.

"We believe that the government may now easily allow around 1.8 MMt of additional sugar diversion for production of ethanol in the current season," the Indian Sugar Mills Association (ISMA) said in a statement.

The National Federation of Cooperative Sugar Factories (NFCSF), another industry body, advocated for at least an additional 1.5 MMt, arguing that such a move would help sugar mills and distilleries resolve the financial problems they are facing.

The late rainfall has improved sugar cane yields with sugar production in the 2023/24 season seen at 31.4 MMt, up from an initial forecast of 29.15 MMt.

India is likely to end the current season with sugar stocks of 8.45 MMt, up from 5.6 MMt last year, with production seen surpassing local demand of around 28.5 MMt, the ISMA said.

Mills have produced 18.72 MMt of sugar from October to January, slightly down from the 19.5 MMt in the year-earlier period, according the the ISMA.

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