Industry and government sources said on Friday that India is likely to put a cap on sugar exports for the second year in a row, beginning in October, in order to secure enough domestic supply and keep local prices under control.
According to industry and government sources, India, the world’s largest sugar producer, may limit sugar exports to 6 million to 7 million tonnes in the 2022/23 October-September season, almost one-third less than the current season’s total. They requested anonymity since they were not authorized to speak to the media.
India’s export restrictions, which make it the world’s second-largest sugar exporter, might push up benchmark white sugar prices, which are already around five-and-a-half-year highs, traders said.
After the media revelation, July raw sugar surged 1.88 percent to 18.93 cents per pound, while August white sugar gained 1.77 percent to $568.70 per tonne.
In the meantime, shares in major sugar manufacturers including Shree Renuka Sugars, Bajaj Hindustan Sugar, and E I D-Parry (India) Ltd plummeted by 2% to 6%.
Lower sugar supply in Brazil, the world’s largest producer and exporter, and crude oil prices at multi-year highs are among the reasons driving global sugar prices this year. Sugar mills are diverting more cane to generate ethanol for mixing into fuel as crude oil prices rise.
Brazil’s sugar output is expected to increase this season, but with India’s exports restricted, traders do not anticipate prices to fall, and instead expect them to rise.
“There is a need to limit exports to minimize market panic,” a senior government source familiar with the situation said.
The export quota for next season is anticipated to be set between 6 million and 7 million tonnes, according to sources, although the actual amount will be determined closer to the start of the 2022/23 season.
Before deciding on the quota, the government will assess the monsoon’s performance.
According to meteorological office statistics, monsoon rainfall in sugarcane growing districts of Maharashtra, India’s largest producer, have been 60 percent below average since the start of the rainy season on June 1.
For the first time in six years, New Delhi placed export limitations on sugar, capping shipments at 10 million tonnes this season.
Industry and government forecasts suggest that record exports in the current season might reduce stockpiles to 6.5 million tonnes on Oct. 1, when the following 2022/23 season begins, compared to 8.2 million tonnes a year earlier.
