On Monday, sugar prices in India climbed by over 6.00% in two weeks and are likely to go higher due to an expected production drop.
Sugar futures for May delivery increased by 0.17% to $0.24 per pound on April 10’s Asian afternoon session.
Based on industry officials, bulk consumers’ demand for the crop will strengthen in the peak summer season. However, the price boost could affect food inflation and discourage New Delhi from enabling more exports. Deliveries support global prices, which are near to hitting multi-year highs, said by analysts.
Due to weaker production in the primary sugar-producing state, Maharashtra, grain prices are gaining benefits. Besides, it is anticipated to produce around 10.50 million tons in the marketing year of 2022/23 ending on September 30. Lower compared to an expected 13.70 million tons.
According to analysts, sugar will rise further in the following months as the demand from bulk consumers is bound to go higher.
From April to June, the request for the commodity rises due to the increasing consumption of cold drinks and ice cream in India. Also, it surged during the wedding season.
Additionally, orders for the output recovered after the effects of the COVID-19 pandemic. Based on an expert, it could hit a 28.00 million-ton record this year.
Asian Production Drops Helping Sugar Prices
According to analysts, the increase in sugar prices was brought about by a reduction in sugar production in Asian countries.
In March, the United Nations Food and Agriculture Organization Sugar Price Index reached 127 points. It is 1.50% higher compared to last month, based on the data reported by the Food and Agriculture Organization.
It marks the second continuous month the index grew, reaching new records since October 2016.
Furthermore, the price of the London Sugar Futures hit a 10-year high. As a result, the surging international prices led to more sugar import costs for China, supporting prices.
The Asian country’s self-sufficiency rate is below 70.00% throughout the year. Also, it limited production in terms of planting areas, yields, costs, and income.
