India might take the bigger step to prevent sugar export from October. Due to lack of rain, the sugarcane yields have been low which has forced the government to stop shipments from exporting for the first time in seven years, said official sources.
The impact of government’s move would possibly raise benchmark prices in New York and London that have already reached multi-year highs in trade, propelling doubts of more inflation in global food markets.
A government source said, “Our primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane. For the upcoming season, we will not have enough sugar to allocate for export quotas.”
India made permissible export of only 6.1 million tonnes of sugar in the ongoing season till September 30, before which the country sold a record 11.1 million tonnes last season.
India levied a tax of 20% on sugar exports, in 2016, to curb overseas sales.
According to weather department data, monsoon rains have been up to 50% below average so far this year in the key cane growing regions of the western state of Maharashtra and the southern state of Karnataka, which together produce more than half of all the sugar produced in India.
An industry executive warned that patchy rainfall would lower sugar production in the 2023–2024 season and even decrease planting for the 2024–2025 season. Since nearly two years, local sugar prices have increased this week, prompting the government to enable mills to sell an additional 200,000 tonnes in August.
“Food inflation is a concern. The recent increase in sugar prices eliminates any possibility of exports,” said another government source.
Retail inflation in India increased to 7.44% in July, a 15-month high, and food inflation to 11.5%, the highest level in more than three years. In the 2023–2024 season, India’s sugar output could drop 3.3% to 31.7 million tonnes.
“We’ve allowed mills to export large volumes of sugar during the past two years. But we also have to ensure sufficient supplies and stable prices,” said another government source.
Last month, India startled customers by forbidding the export of non-basmati white rice. In an effort to lower food prices in advance of the state elections later this year, New Delhi also placed a 40% levy on onion exports last week.
Lower output in Thailand is also anticipated to restrict shipments, according to a Mumbai-based dealer with a global trade business, and Brazil, a big manufacturer, would not be able to make up the difference on its own.
