India is reportedly planning to ban sugar mills from exporting sugar in the upcoming season starting in October due to reduced cane yields caused by inadequate rainfall. This move, if implemented, would mark the first time in seven years that India has halted sugar shipments. The decline in sugar exports from India could potentially lead to higher benchmark sugar prices in New York and London, which are already at multi-year highs. Such price increases could contribute to concerns about inflation in global food markets.
Sources within the Indian government have indicated that the country’s priority is to meet domestic sugar requirements and utilize surplus sugarcane for ethanol production. Monsoon rains in major cane-growing regions of Maharashtra and Karnataka have been significantly below average this year, impacting sugar cane yields.
Rising local sugar prices have prompted the government to permit mills to sell an additional 200,000 tonnes of sugar in August. This move aims to address concerns about food inflation, which has been rising in India. The country’s retail inflation reached a 15-month high of 7.44% in July, with food inflation at 11.5%, its highest level in over three years.
In the upcoming 2023/24 season, India’s sugar production is expected to decline by 3.3% to 31.7 million tonnes. The government’s decision to potentially ban sugar exports aligns with its efforts to stabilize domestic supplies and ensure price stability.
This move follows recent decisions by India to ban non-basmati white rice exports and impose a 40% duty on onion exports. These measures are part of India’s strategy to manage and control food prices in the lead-up to state elections.