India halts sugar exports amid drought; first in 7 years
India is set to halt sugar exports for the first time in seven years due to reduced cane yields caused by insufficient rainfall. The government's primary focus is on meeting local sugar demands and producing ethanol from surplus sugarcane. This decision is expected to raise benchmark prices in New York and London, fueling concerns about global food market inflation. Local sugar prices have reached their highest level in nearly two years, eliminating any possibility of exports.
Monsoon shortage impacts cane-growing states
Monsoon rains in Maharashtra and Karnataka, India's top cane-growing states, have been up to 50% below average this year. This will likely decrease sugar output in the 2023/24 season and reduce planting for the 2024/25 season. Consequently, India's sugar production could drop 3.3% to 31.7 million tons in the 2023/24 season. To address rising prices, the government has allowed mills to sell an additional 200,000 tons of sugar in August.
Government has implemented measures to stabilize prices
To control food prices, India has implemented other measures, such as banning non-basmati white rice exports and imposing a 40% duty on onion exports. These actions aim to stabilize food prices before state elections later this year. However, lower output in Thailand is also expected to impact global sugar shipments, and Brazil, a major producer, may not be able to fill the gap alone.
Global food market faces inflation challenges
India's absence from the world sugar market will likely have significant consequences for global food prices. With local sugar prices already at a two-year high, the government is focusing on ensuring sufficient supplies and stable prices for its citizens. As a result, India's decision to halt sugar exports will have ripple effects on the global market, further exacerbating inflation concerns.
