India intends to suspend sugar exports for the first time in 7 years starting in October due to poor cane yields from insufficient rainfall, as per government sources.
This move could trigger a surge in New York and London benchmark prices, which are already hovering at multi-year peaks.
This development has raised apprehensions about a potential spike in global food market inflation.
In the current season, India permitted the export of only 6.1 million tonnes of sugar, a substantial reduction from the record 11.1 million tonnes allowed in the previous season. In 2016, the nation introduced a 20% tax on sugar exports to curb foreign sales.
Monsoon rains in major cane-growing regions, Maharashtra and Karnataka, have plummeted by up to 50% compared to the yearly average.
These areas contribute over half of India’s total sugar output. Consequently, sugar production is anticipated to decrease in the 2023/24 season and during the following planting season.
The recent surge in local sugar prices, reaching a nearly two-year high, prompted the government to authorize an additional sale of 200,000 tonnes in August.
Retail inflation in India surged to a 15-month high of 7.44% in July, with food inflation soaring to 11.5% – the highest in over three years.
India’s sugar production is projected to drop by 3.3% to 31.7 million tonnes in the upcoming 2023/24 season.
Beyond sugar, India’s recent ban on non-basmati white rice exports and the imposition of a 40% duty on onion exports indicate efforts to stabilize food prices ahead of forthcoming state elections.
Analysts warn that the expected lower output in Thailand and the inability of Brazil, a major producer, to bridge the gap completely could exacerbate global supply concerns.
