Sugar prices rallied as concerns over adverse weather conditions in India, the world’s second-largest sugar producer, raised worries about global sugar production.
Oct NY world sugar #11 (SBV23) on Friday closed up +0.75 (+2.99%), and Oct London white sugar #5 (SWV23) closed up +12.80 (+1.79%).
India experienced a shortfall in monsoon rainfall from June to August, mainly in Maharashtra and Karnataka, major sugar producing states, intensifying concerns about reduced crop yields and potential sugar export restrictions.
Sugar prices have been on the rise since last Wednesday, with London sugar futures reaching a 12-year high. This surge is driven by speculation that India will announce export restrictions on its sugar supplies soon.
Reuters reported last Wednesday that India is contemplating a ban on sugar mill exports in the 2023/24 season starting in October due to a shortage of monsoon rain impacting the country’s sugarcane crop.
A final decision on sugar exports for 2023/24 will be made by India’s food ministry when actual production estimates become available. In the current 2022/23 season, India permitted mills to export only 6.1 million metric tons (MMT) of sugar until September 30, following a record 11.1 MMT export allowance last season.
Yesterday, Agrimandi.live, an analysis and forecasting company on Agri-commodities, after assessing the current situation of rain, crop growth and other factors, has forecasted sugar production in Maharashtra to be around 90 lakh tonnes for the upcoming season.
As per estimation release by Indian Sugar Mills Association (ISMA) on August 02, sugar production in the country is projected to decline to 316.80 lakh tonnes during the new sugar season starting in October 2023. This decline is attributed to the increased diversion of sugar towards ethanol production. The estimate for the 2022-23 season is around 328 lakh tonnes of sugar production. ISMA also indicated that around 45 lakh tonnes of sugar are expected to be diverted towards ethanol production during the 2023-24 season, compared to an estimated 41 lakh tonnes in the 2022-23 season.
