India continues restriction on sugar exports
India, the world’s second largest sugar producer, extended export restrictions in an attempt to protect domestic stocks. This decision is likely to tighten the global market and increase costs for the food industry. India has introduced quotas in 2022/2023 MY and limited sugar exports to about 6 million tons after a decline in the cane harvest due to late rains, Bloomberg reports.
Raw sugar futures are approaching their highest level since 2011 due to concerns about reduced supplies from India and Thailand. While the ban may reduce domestic prices in India, it is a blow to global producers of various products, including carbonated beverages, chocolate, and baked goods.
The Indian government does not want to risk inflation, especially before the upcoming elections in several states and national elections in 2024. The country is facing the weakest monsoon in five years, and any reduction in agricultural production will increase pressure to control food prices.
These export restrictions do not apply to sugar, which is supplied to the European Union and the United States under certain quotas. Since the beginning of the year, domestic sugar prices in India have increased by 3%. Most analysts and traders surveyed suggest that India will not be able to export sugar this season due to low production.
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