NEW DELHI: India, the world’s second-largest sugar producer, has extended its export curbs in a renewed bid to protect domestic supplies, a move likely to tighten the global market and raise costs for the food industry.
The government will continue its restrictions on overseas shipments of the sweetener after October 31, according to a notice from the Directorate General of Foreign Trade on Wednesday, confirming a Bloomberg News report from last week.
India introduced a quota system in 2022-23 and limited sugar exports to around 6 million tonnes after the latter rains cut production, compared to an unrestricted 11 million tonnes a year earlier. It is unclear at this stage the size of the quota for overseas shipments that will be allocated to millers for the 2023-2024 period.
Raw sugar Futures are hovering around their highest level since 2011, due to concerns about faltering supplies from India and Thailand. While the ban may drive down domestic prices in India, it is a blow to global producers of everything from soft drinks to chocolate and pastries.
The Indian government is not taking any risks regarding inflation. Several states will go to the polls next month, ahead of national elections in 2024, when Prime Minister Narendra Modi will seek a third term. The country recorded its weakest monsoon in five years and any drop in agricultural production will increase pressure on authorities to keep food prices under control.
“I highly doubt that the government will allow export quotas this season as the harvest is expected to be lower this year due to lack of rainfall in key growing areas,” said Kona Haque, head of commodity research at ED&F Man.
Raw sugar futures in New York rose as much as 0.7% to 27.67 cents per pound, while the white variety in London rose more than 1% after the Indian government’s announcement.
India’s sugar production is likely to fall 3.4% from a year earlier to 31.68 million tonnes in the year starting October 1, according to the Indian Sugar Mills Association.
According to the notice, the restriction does not apply to sugar exported to the European Union and the US under certain quota systems.
Domestic sugar prices are up about 3% so far this year, according to data collected by the Ministry of Food. The government indirectly controls costs because it regulates the volume that millers can sell each month.
According to a Bloomberg survey of 14 analysts, traders and millers last month, most say India may not export sugar this season due to lower production. Two respondents said the shipments could total at least 2 million tons.
According to the notification, India has also restricted the shipment of organic sugar.
The government will continue its restrictions on overseas shipments of the sweetener after October 31, according to a notice from the Directorate General of Foreign Trade on Wednesday, confirming a Bloomberg News report from last week.
India introduced a quota system in 2022-23 and limited sugar exports to around 6 million tonnes after the latter rains cut production, compared to an unrestricted 11 million tonnes a year earlier. It is unclear at this stage the size of the quota for overseas shipments that will be allocated to millers for the 2023-2024 period.
Raw sugar Futures are hovering around their highest level since 2011, due to concerns about faltering supplies from India and Thailand. While the ban may drive down domestic prices in India, it is a blow to global producers of everything from soft drinks to chocolate and pastries.
The Indian government is not taking any risks regarding inflation. Several states will go to the polls next month, ahead of national elections in 2024, when Prime Minister Narendra Modi will seek a third term. The country recorded its weakest monsoon in five years and any drop in agricultural production will increase pressure on authorities to keep food prices under control.
“I highly doubt that the government will allow export quotas this season as the harvest is expected to be lower this year due to lack of rainfall in key growing areas,” said Kona Haque, head of commodity research at ED&F Man.
Raw sugar futures in New York rose as much as 0.7% to 27.67 cents per pound, while the white variety in London rose more than 1% after the Indian government’s announcement.
India’s sugar production is likely to fall 3.4% from a year earlier to 31.68 million tonnes in the year starting October 1, according to the Indian Sugar Mills Association.
According to the notice, the restriction does not apply to sugar exported to the European Union and the US under certain quota systems.
Domestic sugar prices are up about 3% so far this year, according to data collected by the Ministry of Food. The government indirectly controls costs because it regulates the volume that millers can sell each month.
According to a Bloomberg survey of 14 analysts, traders and millers last month, most say India may not export sugar this season due to lower production. Two respondents said the shipments could total at least 2 million tons.
According to the notification, India has also restricted the shipment of organic sugar.
ADVERTISEMENT
