India is anticipated to prohibit sugar mills from exporting their produce in the upcoming season that begins in October due to decreased cane yields caused by inadequate rainfall, according to three undisclosed government sources. This decision would mark the first time in seven years that India suspends sugar shipments, with the primary goal being to prioritize domestic sugar supply and the production of ethanol using surplus sugarcane.
The potential absence of India, a major player, from the global sugar market could result in an upward push on benchmark prices in New York and London, both of which are already at multi-year highs.
This development raises concerns about potential inflation in global food markets. The government sources stressed that the focus is on meeting local sugar demand and addressing supply shortages, which means there won’t be enough sugar available for export quotas in the upcoming season.
The current season, set to conclude on September 30, only permitted mills to export 6.1 million tonnes of sugar, a substantial reduction from the record 11.1 million tonnes allowed in the previous season. Insufficient monsoon rains in key cane-producing regions like Maharashtra and Karnataka have significantly impacted yields this year.
The reduced export output expected in the 2023/24 season, attributed to insufficient rainfall, could also negatively impact planting for the following season, according to an unnamed industry official. The rise in local sugar prices, reaching their highest point in almost two years, led the government to grant mills permission to sell an additional 200,000 tonnes in August. With concerns over food inflation, the government has chosen to prioritize domestic supply over exports.
India’s sugar production is projected to decline by 3.3% to 31.7 million tonnes in the upcoming season. The government sources emphasized that while significant export volumes were allowed in the past two years, the priority now is maintaining stable supplies and prices. Alongside the potential halt in sugar exports, India has recently imposed bans and duties on exports of other food items, including non-basmati white rice and onions, as part of efforts to manage food prices in light of upcoming state elections.
