We have already informed you about the monsoon rains in India in our article on wheat exports. Well, of course, these rains are affecting the export of almost all agricultural commodities and so sugar is not exempt from the problems.
India is currently the world’s second-largest producer of sugar. Now the rains are making it difficult for many companies to get their stocks from the factories to the ports. Therefore, the date has been extended from the original July 5 to July 20. The original date was missed by some producers, so now the good news for them is that they can export their products without any problems.
India has limited its exports this year
Like wheat, sugar was facing a sharp increase in domestic prices after local firms exported record amounts of sugar to world markets. This was because it was lucrative for them to sell their commodity abroad at a higher price at a time of high world prices of everything. To prevent this, the government has limited this year’s exports to only 10 million tonnes so that there is no price rise linked to shortages in the domestic Indian market. This is the first time in the last six years that the government has resorted to curbing exports.
Read also: India imposes windfall tax on oil firms
So now more sugar should be allowed to be exported which was produced for export even before the government’s restriction. Since next year’s crop is expected to be very high, there is unlikely to be any shortage.
India is likely to become the world’s largest producer
India will surpass Brazil to become the world’s largest sugar producer in the marketing year to 30 September, producing 36 million tonnes, according to estimates by the International Sugar Management Association (ISMA).
The managing director of one of India’s largest commodity trading companies, MEIR Commodities, said that given the weak rupee and lucrative firm global sugar prices, the government should announce its policy for next year at the earliest. Whether there will be any restriction or not affects the planning of all the companies involved in the entire chain. Then he said.
“Millers and traders can sign contracts for next season now. Even if prices fall after a few months, it will have no impact on exports.”
Post has no comment yet.