India’s Sugar Shortage : In a pivotal move to curb domestic inflation and safeguard food security, India’s recent decision to ban certain rice exports has raised alarms among traders who fear a similar fate for another dietary staple Sugar Shortage. As the world’s dependence on Indian sugar exports grows amidst tightening global supplies, the concern looms large that the nation’s sugar production might fall short for a second consecutive year, igniting a potential crisis.
India’s agricultural belts have been plagued by erratic rainfall, casting a shadow of doubt over the upcoming sugar production season commencing in October with Sugar Shortage. This meteorological uncertainty threatens to curtail sugar exports, adding to the already stressed global food markets reeling from unfavourable weather conditions and the escalating conflict in Ukraine.
Henrique Akamine, the head of sugar and ethanol at Tropical Research Services, interprets the rice export ban as a clear indicator of the government’s apprehension about food security and inflation. He postulates, “The worry now is that the government will probably follow suit and do something similar regarding sugar.”
India’s Sugar Shortage & President Of India Sugar Mills Association
The onset of distress for sugar cane fields in key producing regions like Maharashtra and Karnataka has been attributed to inadequate rainfall in June leading to Sugar Shortage. Aditya Jhunjhunwala, president of the Indian Sugar Mills Association, states that this adverse climate has resulted in crop stress, estimating a 3.4% decline in sugar output from the previous year, projecting 31.7 million tons for the upcoming season. Nonetheless, Jhunjhunwala reassures that despite these challenges, domestic sugar demand can be met.
Adding a unique twist, India’s strategic shift towards biofuel utilization is set to consume a significant portion of its sugar production. The Indian Sugar Mills Association anticipates that mills will divert 4.5 million tons for ethanol production, marking a 9.8% increase from the previous year.
Bruno Lima, head of sugar and ethanol at StoneX, cautions that given the current production levels, India might opt to refrain from sugar exports altogether. He emphasizes, “We’ll have to follow closely if the ethanol diversion will be done in full.”
In contrast to this cautionary sentiment, India’s Food Secretary Sanjeev Chopra rebuts ISMA’s apprehension of a sugar shortage, labeling it as premature panic, according to the Press Trust of India.
This isn’t the first time India has imposed restrictions on sugar exports. The 2022-23 season saw exports capped at 6.1 million tons, down from the previous year’s 11 million tons. Looking ahead, experts such as Akamine and Lima anticipate an even more limited allowance of 2 million to 3 million tons for the next season, or perhaps none at all, potentially sparking a further surge in global sugar prices.
Despite a recent retreat from April’s peak, Sugar Shortage futures have seen a roughly 20% increase this year. Concerns about El Niño-induced hotter and drier conditions in South and Southeast Asia, coupled with anticipated production declines in regions like Thailand, Southern Africa, and Central America, could trigger another price rally. Akamine envisions prices ranging between 25 and 27.5 cents a pound for the upcoming season, against the current rate of 23.69 cents.
Brazil’s substantial sugar crop is currently acting as a mitigating factor on price gains. With the Indian government deferring any decisions on the 2023-24 sugar export quotas until harvest commencement in October, only time will reveal the true extent of the upcoming sugar shortage.
Carlos Mera, a senior commodity analyst at Rabobank, anticipates that officials will exercise prudence and wait for full production visibility before making any determinations.
Also Read : Canadian Immigration : Learn how category-based draws global talent By The New Minister From 1 July 2023