India to cap sugar exports until H1 2024

India is mulling sugar exports cap until at least the first half of 2024, as the Narendra Modi government is worried the El Nino weather pattern could reduce rainfall and dent production, reported Reuters, citing Indian government sources on Monday.

Local traders said even if India's decision does not affect Bangladesh directly, it will have an indirect impact on the Bangladeshi market.

India, the world's second biggest sugar exporter, usually decides the amount of the sweetener mills can export before the start of the new marketing year on 1 October. The delay in shipments from India could support global sugar prices, trading near multi-year highs.

"The weather is a big negative factor. Last year, despite good monsoon rains, sugar production fell. This year, with El Nino, we cannot take the risk of allowing exports early," said a senior official of the Indian government who did not want to be identified in line with official rules.

The El Nino weather pattern, which triggered most droughts that India faced during the past seven decades, could bring about extreme weather later this year.

"In any sugar season, it takes at least a few months to get a clear idea about production, and that is why we will wait until there is an absolutely clear picture about production," said another government official, who also declined to be identified.

"As far as exports are concerned, we will not be in any hurry at all."

At the start of the current sugar season to 30 September 2023, the industry pegged this year's output at 36 million tonnes, which has been scaled down to 32.8 million tonnes.

Due to the lower output, India allowed exports of 6.1 million tonnes for this season. As the quota is exhausted, India is currently not exporting sugar.

Even if India agrees to allow exports later during the 2023-2024 season, New Delhi may not allow more than 4 million tonnes, the officials said. The government is keen to control food prices ahead of some state elections in 2023 and a general election in mid-2024.

The country exported more than 11 million tonnes in 2021/2022, an all-time high.

The world needs more Indian sugar as early as possible since global prices are trading near 11-years high, said a Mumbai-based dealer with a global trade house.

"The delay in Indian exports will further lift prices, and will allow Brazilian sellers to demand even higher prices," said a Mumbai-based dealer with a global trade house.