Centre on Wednesday banned sugar exports with immediate effect until September 30 or until further orders, as the government moved to rein in domestic prices amid concerns over lower production, according to a government notification cited by Reuters.The decision is expected to tighten global sugar supplies and support international prices, while giving rival exporters such as Brazil and Thailand an opportunity to increase shipments to buyers in Asia and Africa.India, the world’s second-largest sugar producer and one of the biggest exporters after Brazil, had earlier allowed mills to export 1.59 million metric tonnes of sugar after estimating that output would exceed domestic demand.However, production is now expected to trail consumption for a second straight year as cane yields weaken in key producing regions, as per Reuters.
Lower output fears trigger export curb
According to Reuters, forecasts of El Nino weather conditions disrupting this year’s monsoon have also heightened concerns that next season’s sugar production could fall below initial estimates.Of the 1.59 million metric tonnes approved for export, traders had already signed contracts for around 800,000 tonnes, and more than 600,000 tonnes had been shipped, dealers told Reuters.The government notification said exports of both raw and white sugar would be prohibited, although certain consignments already in the export pipeline would still be allowed under specified conditions.Shipments will be permitted if loading had begun before publication of the notification in the Official Gazette. Exports will also be cleared if a shipping bill had already been filed and the vessel had berthed, arrived or anchored at an Indian port before the order came into effect.Additionally, consignments handed over to customs or custodians before publication of the notification will also be allowed to proceed.
Global sugar prices rise after decision
“The government had provided additional export quotas in February, which encouraged traders to sign export deals. It will now be a headache for traders to fulfill those export orders,” a Mumbai-based dealer with a global trade house told Reuters.Following the announcement, New York raw sugar futures extended gains to more than 2%, while London white sugar futures jumped 3%.
