India is going to reduce sugar exports by 20% on the global commodity market. The decrease began in October 2022, when production commenced, and will continue until September 2023. The third-largest power in Asia would then export only 9 million tons of the raw material, which is less than the 11 million tons it exported during the 2021-22 season. In reality, the Indian government intended to export only 8 million tons last spring, but a more significant domestic surplus prompted the government to increase the amount.
Depending on the production rate, 6 million should be shipped in the first tranche and 3 million in the second. Therefore, each export requires special authorization from the government. On the one hand, the objective is to control the domestic inflation rate, which, according to the most recent figures from the National Bureau of Statistics, has risen to 7.41% due to a very high domestic demand. On the other hand, the objective is to shift a portion of production to ethanol processing, which also plays a vital role from an energy standpoint.
India is the world’s largest sugar consumer and the second-largest sugar producer. The United States, Europe, Indonesia, Malaysia, the United Arab Emirates, and Bangladesh are the primary destinations for India’s sugar exports. The Indian Sugar Mills Association anticipates that India will produce approximately 35,5 million metric tons of sugar this year.
As a result of rains in some regions of Brazil, sugarcane crushing has slowed compared to last year, which could pose a significant problem for global supply. The good news is that the restrictions imposed by the Indian government will not apply to sugar exported to the European Union and the United States, as those exports are in accordance with predetermined quotas. On the commodities market, March 2023 sugar futures are trading at around $19, a change of approximately 5% since the beginning of the year. There is concern that the restrictions imposed by the Indian government could result in a price increase that contributes to a rise in overall inflation.