On Tuesday, sugar prices edged higher due to dry Indian weather, which threatens to curb output, causing concerns about the crop.
Sugar futures for October delivery increased by 0.15% to $25.90 per pound on September 05’s Asian afternoon session. Likewise, its price in London climbed by 0.30% to $730.20 per metric ton, approaching a 12-year high.
India has been experiencing a severe drought in the first half of this year. Also, it only witnessed low rainfall in the monsoon season. According to experts, the weather issue is an advantage to prices.
Significant sugar-producer states like Maharashtra and Karnataka received lower-than-average rainfall. As a result, they had 3.30% less production, or 31.7 million tons, for the 2023/24 season. Also, the conditions push forecasts of negative impacts for the 2024/25 production season.
Based on analysts, the country produces grain mainly for domestic consumption and utilizes excess sugarcane in ethanol making.
On the other hand, the Indian government allowed the export of 6.1 million tons of the commodity.
China’s most active sugar contract for January delivery rose, closing at ¥7,038.00 per ton. On Monday, futures under the Zhengzhou Commodity Exchange (ZCE) stood at 659,751 lots.
Since the Asian country is the world’s top consumer and importer of the sweetener, it listed its futures on ZCE. Moreover, it helped sugar-related businesses to limit price risks.
India Plans on Sugar Export Bans
According to the Director-general of the Foreign Trade Department, the Indian government is anticipated to announce a sugar export ban. It is aimed at the upcoming season’s deliveries to reserve enough supply for domestic use.
For now, global commodity prices are controlled by three significant exporting giants: Brazil, Thailand, and India. The latter is expected to enormously impact the sweetener’s prices if the country proceeds with the measure.
Moreover, India is one of the largest sugar producers in the world, with an approximate 1.4 billion population. Domestically, it consumes most of the crop.
Its government’s decision to restrict exports will likely significantly affect the global market. Also, it could result in less worldwide consumption and higher prices.
