India’s sugar shortfall is worsening as disappointing cane crops boost the need for imports this season.

Reduced cane supplies in the states of Maharashtra and Karnataka mean output will probably fall to the equivalent of 21.3 million metric tons of white sugar, according to Tropical Research Services, which advises several hedge funds on agriculture markets. That’s 4 percent smaller than forecast last month and 15 percent below a year earlier.

The El Nino weather pattern that ended this year hurt cane crops in India, the biggest sugar-consuming country and second- largest producer. At the same time, the harvest in No. 2 exporter Thailand is running behind last season’s pace, helping tighten global supplies already forecast to fall short of demand.

“Early reports from both the key Maharashtra state in India and also from Thailand suggest their cane crops could disappoint," James Liddiard, a partner at Agrilion Commodity Advisers LLC, said in a report Wednesday.

Eoin Treacy's view

Brazil’s sugar crop is coming in ahead of expectations suggesting that the disappointing figures in Thailand and India will be at least partially compensated for. However contracts are in backwardation out to late 2018 so the supply deficit is not a short-term phenomenon and it will take time for new planting to rebalance the market. 

White Sugar found support this week in the region of the trend mean and a sustained move below 500 would be required to question medium-term scope for additional upside.