India’s absence from the world market is expected to increase benchmark prices in New York and London, which are already trading at multi-year highs. This has raised concerns about further inflation in global food markets. The government of India has stated that their main focus is to meet domestic sugar demands and produce ethanol from surplus sugarcane. As a result, they will not have enough sugar to allocate for export quotas in the upcoming season.
India had allowed mills to export only 6.1 million tonnes of sugar in the current season, compared to a record 11.1 million tonnes in the previous season. In 2016, a 20% tax was imposed on sugar exports to limit overseas sales. The lack of rainfall is expected to result in lower sugar output in the 2023/24 season and even reduce planting for the 2024/25 season. The increase in local sugar prices has prompted the government to permit mills to sell an additional 200,000 tonnes in August.
Overall, India’s reduced sugar exports and potential decrease in production due to weather conditions are likely to impact global sugar prices, leading to concerns about inflation in the global food market.