As a result of low cane yields due to a lack of rain, India is anticipated to forbid mills from exporting sugar starting in the upcoming season in October, suspending shipments for the first time in seven years. India’s exit from the global market would probably push up benchmark prices in New York and London, which are currently trading at multi-year highs, raising concerns about future food market inflation.
After allowing mills to sell a record 11.1 million tonnes of sugar the previous season, India only allowed them to export 6.1 million tonnes of sugar during the current season through September 30. To reduce export shipments of sugar, India added a 20% tax in 2016.
According to weather department data, monsoon rainfall in the major cane-growing regions of the western state of Maharashtra and the southern state of Karnataka, which together produce more than half of all the sugar produced in India, have been up to 50% below average so far this year.
Since nearly two years, local sugar prices have increased this week, prompting the government to enable mills to sell an additional 200,000 tonnes in August. Retail inflation in India increased to 7.44% in July, a 15-month high, and food inflation to 11.5%, the highest level in more than three years. In the 2023–2024 season, India’s sugar output could drop 3.3% to 31.7 million tonnes.
Last month, India startled customers by forbidding the export of non-basmati white rice. In an effort to lower food prices in advance of the state elections later this year, New Delhi also placed a 40% levy on onion exports last week.
