After Ban On Rice Export, Sugar May Face Curbs Owing To Low Production: Report

Sporadic rainfall received across India’s agricultural regions has caused worries about a shortage in sugar production.

More bad weather conditions in South and Southeast Asia courtesy of El Nino and lower production in Southern Africa and Central America might further impact supplies.

Source : Getty

Traders are worried that sugar will be the next target now that rice exports have been banned by India. The ban, an attempt to control domestic prices by the government, has affected supplies globally. According to a Bloomberg report, sporadic rainfall received across India’s agricultural regions has caused worries about a shortage in sugar production. The potential deficiency will affect India's export abilities. 

While the global sale of wheat and certain rice varieties has already been restricted to preserve supplies domestically and keep a tab on prices, this has led to a severe impact on food markets worldwide which were already suffering due to bad weather and the conflict in Ukraine.

Henrique Akamine, head of sugar and ethanol at Tropical Research Services, noted that the ban on rice exports reflects the government’s concern about food security and inflation. He said, “The worry now is that the government will probably follow suit and do something similar regarding sugar,” as quoted in the report. 

Aditya Jhunjhunwala, president of the Indian Sugar Mills Association (ISMA), stated that sugarcane production in Maharashtra and Karnataka has suffered due to uneven rains in the month of June, and sugar output is expected to fall by 3.4 per cent from a year ago to 31.7 million tonnes in 2023-24. He added that the domestic demand can still be satisfied with the supplies, the report noted. 

Indian food secretary Sanjeev Chopra criticised ISMA’s sugar production assessment on Friday, terming it “highly premature” and blamed it for creating “panic of a shortage in the country”, the report added quoting a report by PTI.

India has exercised a curb on sugar exports in the past, the report further stated. Exports for the 2022-23 season are capped at 6.1 million tons, compared to 11 million tons in the earlier year. Analysts estimate that for the next season, the allocations might lie in the range of only 2 to 3 million tons or nothing. This will again create a surge in prices worldwide. 

While sugar futures have retreated from the April high of 26.83 cents a pound, the highest since 2011, they remain high by about 20 per cent this year. More bad weather conditions in South and Southeast Asia courtesy of El Nino and lower production in Southern Africa and Central America might further impact supplies. Akamine estimated the price range of 25 cents and 27.5 cents a pound for the next season. 

But any decision on India’s sugar export quota for the next season is unlikely any time soon. Harvest is expected to start in October and ISMA hopes the crop will benefit from the latest improvements in the rain, the report stated.