Sugar market expects restrictions in India after monsoon rains

With the end of the monsoon season in India, interest in the state of the sugar harvest is growing in light of possible export restrictions, writes Bloomberg.

The global sugar market is under pressure due to concerns that inadequate rainfall will reduce the harvest and force India to impose export restrictions. This may be due to the need to control local prices ahead of the upcoming elections. Although government officials express confidence in the harvest, traders and analysts predict restrictions will be imposed.

The monsoon in India lasts from June to September. Major sugarcane growing regions - Maharashtra and Karnataka - are facing rain deficit this season. It is worth noting that India is the second largest sugar producer in the world after Brazil. The government has already imposed export restrictions on products such as rice and wheat.

According to the National Meteorological Bureau, the overall rainfall deficit was 6%. In Maharashtra it reached 14% and in some parts of Karnataka it reached 27%.

Last year, late rains reduced the harvest, forcing India to curb exports. Volumes could be even lower this year, likely leading to further restrictions on exports, according to chairman of Shree Renuka Sugars Ltd.

According to a Bloomberg survey, most analysts believe that sugar exports may be stopped in the new season due to decreased production. However, some believe that exports could reach at least 2 million tons.

At a recent conference in New Delhi, it was stated that sugar production is expected to be 28.6 million tonnes this season.

Sugar prices in India have already increased by 5% since the beginning of the year. The government regulates sales by controlling the cost of sugar to consumers.

The harvest will begin next month. According to Sanjeev Chopra, food secretary, crop prospects have improved following the recent rains. He also stressed that the country will not face a sugar shortage.

However, any reduction in production could cause concern in the market, especially given crop problems in other countries such as Thailand. Globally, raw sugar prices are already close to a 12-year high, and further fluctuations in global supply could further accelerate this trend.