India Extends Sugar Export Curbs in Risk to World Supply

India, the world’s second-biggest sugar producer, extended its export restrictions in a renewed bid to protect domestic supplies, a move that will likely tighten the global market and raise costs for the food industry.

The government will continue its curbs on overseas shipments of the sweetener beyond October 31, according to a notice from the Directorate General of Foreign Trade on October 18, confirming a Bloomberg News report last week.

India introduced a quota system in 2022-23 and limited sugar exports to about 6 million tons after late rains cut production, compared with an unrestricted 11 million tons a year earlier. It’s unclear at this stage the size of the quota, if any, for overseas shipments that will be allocated to millers for 2023-24.

Raw sugar futures are hovering near their highest level since 2011 on concerns about faltering supplies from India and Thailand. While the ban may cool India’s domestic prices, it’s a blow to global manufacturers of everything from fizzy drinks to chocolate and baked products.

Read more: Sugar Heads Toward Two-Month High on Concern Over Indian Exports

The Indian government is taking no chances with inflation. Several states are heading for polls in the coming month ahead of the national election in 2024 when Prime Minister Narendra Modi will seek a third term. The nation recorded its weakest monsoon in five years and any drop in agricultural output will heap pressure on authorities to control food prices.

“I very much doubt that the government will allow any export quota this season as the crop is expected to be lower this year due to deficient rains in main growing areas,” said Kona Haque, head of commodities research at ED&F Man.

Raw sugar futures in New York climbed as much as 0.7% to 27.67 cents a pound October 18, while the white variety advanced over 1% in London after the announcement by the Indian government.

India’s sugar production is likely to fall 3.4% from a year earlier to 31.68 million tons in the year that began on October 1, according to the Indian Sugar Mills Association.

Read more: Food Prices Resume Decline Despite Lingering Supply Threats

The restriction doesn’t apply to sugar being exported to the European Union and the U.S. under some quota systems, according to the notification.

Domestic sugar prices have gained about 3% so far this year, according to data compiled by the food ministry. The government indirectly controls costs as it regulates the volume millers can sell each month.

According to a Bloomberg survey of 14 analysts, traders and millers in September, most said India may not export any sugar this season due to lower output. Two respondents said shipments could total at least 2 million tons.

India also restricted shipments of organic sugar, according to the notification.

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• Source: https://www.supplychainbrain.com/articles/38309-india-extends-sugar-export-curbs-in-risk-to-world-supply