India likely to impose ceiling on sugar exports from October

India is likely to impose a ceiling on sugar exports for a second straight year starting this October, aiming to ensure ample domestic supplies and keep a lid on local prices, industry and government sources said on Friday.

India, the world’s biggest sugar producer, could cap exports of the sweetener at 6 million to 7 million tonnes in the 2022/23 October-September season, about one-third less than the total to be shipped out in the current season, industry and government sources said. They asked not to be named as they were not authorised to speak to media.

A government spokesman did not immediately respond to a request for comment.

The curbs on exports by India, also the world’s second-biggest sugar exporter, could further lift benchmark white sugar prices, which are already trading near 5-1/2 year highs, traders said.

Among factors underpinning global sugar prices this year are lower sugar output in Brazil, a leading producer and the biggest exporter, and crude oil prices at multi-year highs. Higher crude oil prices encourage sugar mills to divert more cane to produce ethanol for blending into gasoline.

Brazil’s sugar production is set to rebound during the current season, but with restricted exports from India, traders do not expect prices to come down and they instead could go higher.

“There is a need to regulate exports to avoid any kind of panic in the market,” said a senior government official with knowledge of the matter.

While the sources expected next season’s export cap to be set between 6 million and 7 million tonnes, the exact quantity will be fixed near the start of the 2022/23 season, they said.

The government will look at the performance of the monsoon before fixing the quota, they added.

Monsoon rains in sugarcane growing areas of the western India state of Maharashtra, the biggest producer in the country, were 60% below average since the start of the rainy season on June 1, according to weather office data.

New Delhi on May 24 imposed restrictions on sugar exports for the first time in six years with a cap for this season of 10 million tonnes.

Record exports in the current season could bring down inventories to 6.5 million tonnes on Oct. 1, when the next 2022/23 season starts, versus 8.2 million tonnes a year earlier, industry and government estimates show.

Aditya Jhunjhunwala, president of the Indian Sugar Mills Association, a producers’ body, has requested that the government allow mills to export 8 million tonnes of sugar next year, as output could exceed this year’s record 36 million tonnes, according to a letter seen by Reuters. The association did not immediately respond to a request for comment.

The letter also urged the government for an early decision on next year’s export quota to help mills cash in on firm global prices.

India mainly exports to Indonesia, Bangladesh, Sudan, the United Arab Emirates, Nepal and China.

• India