El Nino: India to Cap Sugar Exports until H1 2024, Reveals Govt Sources

Government sources in India revealed that the country is not currently considering allowing sugar exports until at least the first half of the next season. The decision stems from concerns over the potential impact of the El Nino weather pattern, which could lead to reduced rainfall and hinder sugar production. India, the world's second-largest sugar exporter, typically determines the amount of sugar that mills can export before the start of the new marketing year on October 1.

A senior government official, speaking on condition of anonymity, highlighted that last year, despite good monsoon rains, sugar production had fallen. They pointed out that this year, with El Nino, the risk of allowing exports early cannot be taken. The official mentioned that the El Nino weather pattern has historically been linked to droughts experienced by India over the past several decades and may result in extreme weather events later this year.

Another government official, who also wished to remain anonymous, emphasized the need for a clear understanding of production levels before making any decisions on exports. They mentioned that in any sugar season, it takes at least a few months to get a clear idea about production. The official stated that they would wait until there's an absolutely clear picture about production before considering exports. They further mentioned that they would not be in any hurry at all regarding exports.

The government spokesperson did not respond immediately to requests for comment on the matter. For the current sugar season, which runs until September 30, 2023, the industry initially projected an output of 36 million tonnes. However, this estimate has since been revised downwards to 32.8 million tonnes. Consequently, India authorized exports of 6.1 million tonnes for this season, but with the quota exhausted, the country is currently not exporting any sugar.

Even if India decides to allow exports later during the 2023-2024 season, officials predict that the quantity permitted may not exceed 4 million tonnes. The government aims to control food prices ahead of state elections in 2023 and a general election in mid-2024. In the previous season of 2021/2022, India recorded its highest-ever sugar exports, surpassing 11 million tonnes.

A Mumbai-based dealer from a global trade house expressed the urgent need for Indian sugar in the global market due to the current high prices. However, the delay in Indian exports is expected to further drive-up prices and enable Brazilian sellers to demand even higher prices, according to another Mumbai-based dealer from a global trade house.