close up photo of sugar cubes in glass jar

India Imposes Sugar Export Ban Amidst Drought Concerns: Global Prices at Risk

India, one of the world’s leading sugar producers, has sent ripples through the global sugar market with its recent decision to halt sugar exports. The move comes as the country grapples with severe drought conditions brought on by scorching temperatures in the first half of the year, compounded by inadequate rainfall during the monsoon season. India’s enormous population, estimated at approximately 1.4 billion people, places it at the top of the list for domestic sugar consumption globally.

The Director-General of the Department of Foreign Trade within the Ministry of Commerce in India unveiled this crucial decision. The nation’s primary sugarcane cultivation regions, Maharashtra in the west and Karnataka in the south, bore the brunt of the drought, contributing significantly to India’s overall sugar production. These two states typically account for over half of India’s total sugar output.

Unfortunately, the parched conditions resulted in a staggering 50% reduction in rainfall compared to the usual average, causing the 2023/24 sugar production season to plummet to 31.7 million tons—a 3.3% decrease. There are growing concerns that this decline may spill over into the 2024 production season.

India primarily produces sugar for its vast domestic market, with any excess sugarcane being channeled into ethanol production. In the 2022/23 production cycle, the Indian government allowed the export of 6.1 million tonnes of sugar to global markets.

However, in July, India witnessed a concerning surge in retail inflation, soaring to its highest level in 15 months, reaching 7.44%. Food inflation simultaneously hit 11.5%, a three-year high. These worrying indicators have raised doubts about India’s ability to allocate export quotas for the upcoming season (starting in October 2023).

Meanwhile, Thailand, another key player in the global sugar market, experienced a more favorable situation during the 2022/23 production year. Thailand witnessed a significant increase in sugar cane crushed, reaching approximately 93.88 million tons—a 1.97% rise from the previous year. Sugar production also surged to around 11.05 million tons, marking an 8.88% increase from the previous season. During the period from January to July, Thailand exported approximately 5.5 million tons of sugar, reflecting a 2.4% rise from the same period the previous year.

India’s sudden ban on sugar exports has set in motion a chain reaction in the world sugar market. The reduced global sugar supply has sent prices spiraling upward, affecting products that rely on sugar as a key ingredient. As the situation unfolds, stakeholders and market observers around the world will be closely monitoring how this development reshapes the dynamics of the sugar industry and impacts global prices.

Leave a Reply

%d bloggers like this: