Global sugar prices to surge as drought-hit India set to ban exports
The Commerce Ministry has aired concerns about a surge in global sugar prices after India announced it will ban sugar exports for the upcoming production season starting in October.
India, one of the world’s top sugar producers and exporters, is grappling with drought, which has led to a drop in sugar production.
Ronnarong Phoolpipat, director-general of the Commerce Ministry’s Foreign Trade Department, said on Monday that India is the world’s largest consumer of sugar, with its population of some 1.4 billion people.
However, this year, the subcontinent has been hit with a serious drought problem in the first half of the year and relatively low rainfall during the monsoon season.
Key sugarcane-growing Indian states, such as Maharashtra and Karnataka, have experienced significantly low rainfall, resulting in 3.3% less production of sugar or just 31.7 million tonnes for the 2023/2024 season. This situation is also expected to impact planting for the 2024/2025 production season.
Ronnarong admitted that India primarily produces sugar for domestic consumption and uses excess sugarcane for ethanol production.
In the 2022/2023 production season, the Indian government permitted the export of 6.1 million tonnes of sugar.
However, with India’s food inflation hitting 11.5% or the highest in three years, the government has been prompted to hold back on allocating export quotas for the upcoming season.
India’s decision to ban sugar export has pushed global sugar prices to hit a 12-year high on the Intercontinental Exchange at US$740.20 (26,070.95 baht) per tonne.
In contrast, Thailand has harvested some 93.88 million tonnes of sugarcane in the 2022/2023 harvest year, up 1.97% from the previous year.
Sugar production for the same period is estimated at around 11.05 million tonnes, marking an increase of 8.88% from the previous year.
Thailand’s sugar exports in the first seven months of this year stood at about 5.5 million tonnes, up 2.4% compared to the same period last year.
However, India’s decision to halt sugar exports will bring down supplies and push up prices in the global market. This could impact products that use sugar as a key ingredient, potentially causing adjustments in their prices.
