On Friday, the US and UK sugar prices rose as India banned sugar exports amid a drought-affected cane production.
US sugar futures for October delivery climbed by 0.22% to $00.29 per pound. December contract London futures remained at $731.50 per metric ton.
According to reports, the shipment ban will start in October, halting sugar exports for the first time in seven years. The absence of New Delhi in the global market is expected to boost the US and UK markets.
Analysts anticipated the ban on sugar shipments, which was announced a month ago. ED&F Man head of research, Kona Haque, stated that India’s sugar production had been less than the output in 2022.
With the production cuts, Haque said the export ban will likely continue until next year’s season. India could only export 6.1 million tons, but it exported 11.1 million tons in the previous season.
Analysts expect that some governments will store sugar as output reductions start. The Department of Food and Public Distribution (DFPD) has proposed a solution to prevent sugar hoarding.
The issued order stated that there would be a mandatory stock disclosure to maintain a balanced and fair sugar market.
India’s Sugar Exports Halted amid Drought Cut Yields
India, one of the top sugar producers, expects good rains in September following the extreme drought in August.
The country also sees this month’s rains boosting cane yields. However, it may still need to be more due to the lack of rain in the previous month.
In August, small rains in India slashed sugar production from 2023 to 2024. Haque worries that the drought might affect the output from 2024 to 2025 if it continues.
Experts expect global sugar prices to increase due to the drought season that sugar manufacturers face. The surge will likely affect the sugar output of two leading producers, India and Thailand.
