India to Ban Sugar Exports in the New Season Beginning October
Delhi, October 2, 2023 - In a move that could have significant implications for the global sugar market, India is reportedly gearing up to ban sugar exports for the upcoming season, commencing on October 1. According to a report by the news website Moneycontrol, an official notification regarding this decision is expected to be issued in the first week of November.
This prospective ban comes on the heels of government sources informing Reuters just a month ago that India was likely to prohibit mills from exporting sugar in the forthcoming season, marking the first such halt in seven years. The primary reason cited for this action is the adverse impact of a rainfall deficit on cane yields.
Kona Haque, Head of Research at ED&F Man Commodities, had earlier this year predicted that India would abstain from sugar exports during the 2023-24 season due to an anticipated decrease in production compared to the previous year.
During the current season, ending on September 30, India permitted mills to export only 6.1 million tonnes of sugar, nearly half of the record 11.1 million tonnes exported in the preceding season. The expected ban on sugar exports is likely to exacerbate concerns over rising sugar prices in the global market.
Already trading at multi-year highs, benchmark sugar prices in New York and London could experience further increases if India, one of the world's largest sugar producers, withdraws from the international market. The move has raised fears of heightened inflationary pressures on global food markets, adding to existing concerns.
The outlook for India's sugar production in the upcoming season has been dampened by an unusual weather pattern. Although the country is expected to receive average rainfall in September, the driest August in more than a century has taken its toll on sugarcane crops. The delayed rains are anticipated to help partially recover the crop, but yields are likely to be lower due to the earlier rainfall deficit.
Global sugar prices have been on an upward trajectory, largely fueled by concerns surrounding the El Nino weather pattern, which has led to drier-than-normal conditions in major sugar-producing nations like India and Thailand. The combination of these factors has created an environment of uncertainty in the sugar market, with potential consequences for both consumers and producers worldwide.
The final decision on the sugar export ban is awaited with keen interest, as it will not only impact India's sugar industry but also send ripples through the interconnected global market. As India navigates the challenges posed by erratic weather patterns, policymakers will need to strike a delicate balance between domestic supply needs and international market dynamics.