In the upcoming sugar production season starting from October, India is anticipated to prohibit sugar mills from exporting their sugar products. This decision comes after a period of seven years during which sugar exports were allowed. The reason behind this move is a significant reduction in cane yields due to insufficient rainfall, as reported by three anonymous government sources.
The potential outcome of India’s withdrawal from the global sugar market could lead to a rise in benchmark sugar prices in both New York and London. These prices are already trading at levels not seen in several years. This situation raises concerns about the possibility of increased inflation across worldwide food markets.
Primary objective is to meet domestic sugar demands
One government source, requesting anonymity in accordance with official regulations, stated that the primary objective is to meet domestic sugar demands and utilize surplus sugarcane to produce ethanol. The source indicated that, due to the limited sugar availability, there won’t be enough sugar to allocate for export quotas in the upcoming season.
India implemented a 20% tax on sugar exports as a measure to restrict overseas sales
During the ongoing sugar production season ending on September 30, India permitted mills to export only 6.1 million tonnes of sugar. This is a notable reduction compared to the previous season, during which a record-breaking 11.1 million tonnes were allowed for export. In 2016, India implemented a 20% tax on sugar exports as a measure to restrict overseas sales.
The monsoon rains in key cane cultivation regions, specifically the western state of Maharashtra and the southern state of Karnataka, have been notably below average this year. These two states collectively contribute to over half of India’s total sugar output. The rainfall deficit has been observed at levels of up to 50%, according to data from the weather department.
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