India Delays Sugar Exports but the world needs more Indian sugar, as global prices are trading near 11-years high. Check why?
India, the world's second-largest sugar exporter, is not considering allowing sugar exports until the first half of the next season due to worries about the potential effects of the El Nino weather pattern on rainfall and sugar production. The delay could support global sugar prices, which are already trading at multi-year highs
According to government sources, India is currently not considering permitting sugar exports until at least the first half of the upcoming season. The government is concerned that the El Nino weather pattern may lead to reduced rainfall and impact sugar production. Typically, India determines the amount of sugar that mills can export before the start of the new marketing year on October 1. The delay in shipments from India could potentially bolster global sugar prices, which are already trading at multi-year highs.
A senior government official, speaking anonymously, stated that the weather poses a significant risk. Despite favorable monsoon rains last year, sugar production declined. With the potential impact of El Nino this year, the government cannot take the risk of allowing early exports. El Nino, a weather phenomenon that has historically caused droughts in India, may bring extreme weather conditions later this year.
Another unidentified government official emphasized that it takes several months to have a clear understanding of sugar production during any given season. Therefore, the government will wait until there is a complete picture of production before making export decisions. They also highlighted that there is no rush when it comes to exports.
The government spokesperson did not provide an immediate response to a request for comment.
For the ongoing sugar season, which extends until September 30, 2023, the industry initially estimated an output of 36 million tonnes. However, it has since been revised down to 32.8 million tonnes. Due to the lower output, India allowed exports of 6.1 million tonnes for this season. Currently, India is not exporting sugar as the quota has been exhausted.
Even if India decides to permit exports during the 2023-2024 season, officials suggest that the quantity allowed may not exceed 4 million tonnes. The government aims to control food prices ahead of state elections in 2023 and a general election in mid-2024.
In the previous season of 2021/2022, India achieved record sugar exports of more than 11 million tonnes.
A Mumbai-based dealer from a global trade house highlighted the global demand for Indian sugar, particularly since global prices are trading at 11-year highs. The delay in Indian exports is expected to further drive up prices and provide an opportunity for Brazilian sellers to demand even higher prices.
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