India is expected to export less than 800,000 metric tons of sugar this season, falling short of its 1 million-ton quota.
This is primarily due to increasing sugar supplies from Brazil, which are driving down global prices and making Indian shipments less competitive, according to a Reuters report.
In a significant move impacting global sugar markets, India, the world’s largest sugar producer, initiated a policy in January to permit the export of 1 million tons of sugar during the current marketing season, which concludes on September 30.
This decision was primarily driven by a strategic objective to assist domestic sugar mills in offloading their surplus inventories onto the international market.
The Indian government’s intervention came at a crucial time when domestic sugar prices had plummeted to their lowest point in 18 months, causing considerable concern within the industry.
By facilitating exports, the aim was to alleviate the pressure of oversupply within the country, which had contributed to the decline in prices.
This measure was designed to support domestic prices, ensuring better remuneration for sugar mills and, by extension, sugarcane farmers.
The export quota was carefully calibrated to strike a balance between managing domestic surpluses and maintaining adequate supplies for local consumption, thereby preventing any inflationary pressures on consumer prices.
Slow down in exports
India’s overseas sugar sales have slowed in recent months, following an earlier season with numerous deals.
This deceleration is attributed to increased supplies from Brazil and a four-year low in global sugar futures.
As the world’s largest sugar consumer, India’s mills have so far committed to exporting approximately 750,000 tons of sugar and have already shipped around 720,000 metric tons, according to the Reuters report.
The report further claimed that mills in India are expected to sign export contracts of not more than 25,000 tons of sugar by the end of the month under the most optimistic scenario.
This would take the total shipments for the sugar season ending September 30 to 775,000 tons.
The officials quoted in the report said that only a handful of export deals were signed in the past few weeks, which slowed down the momentum of exports for the whole season.
Prospects for next season
Additionally, lower exports for the 2024-25 season could prompt mills to urge the government to allow the remaining 225,000 tons of sugar to be exported in the next sugar production year, beginning October 1.
The officials also said that in recent months, Brazilian sugar has enjoyed an edge over its Indian counterpart because it traded $25 cheaper than Indian shipments.
Traditionally, Indian sugar held an edge over Brazilian supplies in Asia due to the lower freight costs.
Mills have also been selling more in the domestic market due to a rise in sugar prices in India compared to the global benchmark.
India was the world’s second-largest sugar exporter during a period of five years till 2022-23, with shipments reaching an average of 6.8 million tons per year.
The country sells sugars to Afghanistan, Bangladesh, Indonesia, Sri Lanka and the United Arab Emirates, among others.
India has enjoyed a favourable monsoon season this year with plentiful rainfall across the key producing states such as Uttar Pradesh and Maharashtra.
This is likely to lift the output of the sugarcane crop, which requires a lot of water for cultivation, thereby also boosting export possibilities.
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