Finance
Mumbai/New Delhi: Reports indicate that India is poised to prohibit sugar exports from the upcoming season starting October, a move prompted by dwindling cane yields attributed to inadequate rainfall. This decision, marking the first export halt in seven years, might lead to upward price trends in New York and London, where benchmark prices are already trading at multi-year highs. The anticipated scarcity in the world market raises concerns about potential inflation impacts on global food markets.
Sources reveal that India’s priority lies in satisfying local sugar demands and transforming surplus sugarcane into ethanol. With limited sugar stocks projected for the forthcoming season, export allocations are expected to be curtailed. Despite allowing mills to export 6.1 million tonnes of sugar in the current season, down from the record 11.1 million tonnes in the previous season, the shortage-driven embargo underscores India’s shift in focus.
Unfavorable monsoon rains in key cane-growing districts of Maharashtra and Karnataka have led to as much as a 50% shortfall in average precipitation this year, affecting sugar output. Analysts predict a decrease in sugar production for the 2023/24 season, which could also impact planting for the subsequent season. Rising local sugar prices, propelled to a nearly two-year peak, have prompted adjustments to sales allowances, while concerns over food inflation and stable supplies are paramount.
India’s ongoing efforts to control food prices have included not only the potential sugar export ban but also recent curbs on non-basmati white rice and the imposition of duties on onion exports. In this complex landscape, experts suggest that lower output in Thailand and the limitations of major producer Brazil could further contribute to supply gaps and market dynamics.
