Government sources announced on Monday that India will postpone the consideration of permitting sugar exports until at least the first half of the upcoming season. The government expresses concerns about the potential impact of the El Nino weather pattern, which could lead to decreased rainfall and adversely affect sugar production.
India, known as the world’s second-largest sugar exporter, typically determines the quantity of sugar that mills can export prior to the commencement of the new marketing year on October 1st. The postponement of shipments from India has the potential to bolster global sugar prices, which are currently trading at levels not seen in several years.
“The weather is a big negative factor. Last year, despite good monsoon rains, sugar production fell. This year, with El Nino, we can’t take the risk of allowing exports early,” said a senior government official who did not want to be identified in line with official rules.
The El Nino weather phenomenon, responsible for causing a majority of the droughts experienced by India over the past seven decades, has the potential to result in severe weather conditions later this year.
“In any sugar season, it takes at least a few months to get a clear idea about production, and that’s why we will wait until there’s an absolutely clear picture about production,” said another government official, who also declined to be identified.
“As far as exports are concerned, we will not be in any hurry at all.”
No immediate response was received from a government spokesperson regarding the request for comment.
At the commencement of the ongoing sugar season until September 30, 2023, the industry initially estimated this year’s production to be 36 million tonnes. However, it has now been revised downward to 32.8 million tonnes.
In light of the reduced production, India permitted the export of 6.1 million tonnes for this season. However, as the allocated quota has been fully utilized, India is currently refraining from exporting sugar.
According to officials, even if India decides to permit exports later in the 2023-2024 season, New Delhi is unlikely to allow quantities exceeding 4 million tonnes. The government is determined to maintain control over food prices, especially with upcoming state elections in 2023 and a general election scheduled for mid-2024.
In the 2021/2022 period, India achieved a record-breaking export figure of over 11 million tonnes, marking it as the highest ever recorded export quantity for the country.
A dealer based in Mumbai, representing a global trade house, emphasized the growing demand for Indian sugar in the global market. The dealer stated that there is an urgent need for Indian sugar to meet this demand, particularly due to the current high global prices, which are at their highest in 11 years.
“The delay in Indian exports will further lift prices, and will allow Brazilian sellers to demand even higher prices,” said a Mumbai-based dealer with a global trade house.
