Following the lifting of Covid-19 restrictions, India's sugar consumption is projected to touch historic highs in the current summer season, according to industry officials, as demand from bulk users such as cold drink and ice cream makers surges.
According to the Indian Sugar Mills Association, India's sugar consumption in the 2021/22 marketing year, which ends on September 30, is expected to increase by roughly 3% from the previous year to an all-time high of 27.2 million tons (ISMA).
According to the ISMA, Indian mills have already signed contracts to send 7.2 million tons of sugar overseas in the 2021/22 marketing year, putting exports at a record high. As a result, stockpiles in the world's second-largest producer of sweeteners may be reduced, raising local costs.
Higher domestic prices may cause mills to export less sugar and government limitations on new exports, so raising world prices.
"As the summer season has begun, demand from beverage manufacturers has increased. COVID is not a concern this year, as it was the previous year." National Federation of Cooperative Sugar Factories Ltd managing director Prakash Naiknavare said.
"The administration has also relaxed restrictions on weddings and other special occasions," he added. During the summer months, from March to June, India's consumption of cold drinks and ice cream, as well as its demand for sugar, increases.
The wedding season boosts demand in the summer, but officials have restricted the number of visitors at weddings and other festivities in the previous two years to prevent the spread of coronavirus.
Unless the government curbs exports to contain local prices, the country could start the new marketing year with starting stock of approximately 6 million tons, the lowest in five years, according to a Mumbai-based dealer with a global trading rm.
To avoid a spike in domestic prices, India plans to limit sugar exports for the first time in six years, with this season's exports capped at 8 million tons, still a record high, according to government and industry sources quoted by Reuters last month.
Sugar prices in Mumbai have been rising over the past two weeks and are expected to rise further as demand from bulk purchasers increases, according to Ashok Jain, president of the Bombay Sugar Merchants Association.
