India, the World's No.1 Sugar Producer, Imposes Export Restrictions

Export Volume Limited to 10 Million Tons

[Image source=Yonhap News]

[Asia Economy Reporter Oh Gyumin] India plans to restrict sugar exports following wheat.

On the 24th (local time), Bloomberg News and others reported, citing government officials, that the Indian government plans to limit sugar exports for the 2021-2022 marketing year (starting every October) to 10 million tons.

This is analyzed as an effort by the Indian government to secure sufficient stock ahead of the 2022-2023 marketing year to stabilize domestic market prices. Initially, the Indian government intended to set the export limit at 8 million tons annually, but as this year's production is expected to exceed forecasts, it appears they decided to expand the restriction.

In line with this, the Indian Sugar Mills Association recently raised its estimate of India's sugar production this year from 31 million tons to 35.5 million tons. Market sources said that even if India exports all 10 million tons of sugar, it can still hold 6 million tons domestically to sufficiently meet demand during the fourth quarter festival season.

Currently, India has signed export contracts for 8.5 million tons of sugar in this marketing year, of which 7.1 million tons have already been exported.

Recently, global sugar prices have been rising due to decreased production in Brazil and increased oil prices. As oil prices rose, demand for sugarcane used in ethanol production surged in Brazil, which heavily uses bioethanol fuel.

The market is already feeling the shockwaves. Upon news of the Indian government's sugar export restrictions, sugar prices on the London Futures Exchange rose about 1% that day, and shares of Indian sugar producers plummeted.

Meanwhile, some Indian traders are not overly concerned about the export restriction measures. They said that even if the 10 million ton export limit is imposed, a considerable amount of sugar can still be sold on the international market.