By Pratik Parija & Atul Prakash
India sharply reduced its sugar export quota for 2022-2023, potentially worsening the global market outlook already strained by supply hiccups in top shipper Brazil.
The South Asian nation asked the millers to sell 6 million tons in the overseas market by May 31, according to a food ministry notification, indicating it may still permit more shipments through October 2023. The quota for 2021-2022 totaled 11.2 million tons.
The move comes at a time when the world is already thirsty for supplies, with Brazil witnessing excessive rains and delays in sugar cane crushing. Raw sugar in New York have jumped more than 6% since late October, and could strengthen further following the announcement by India that vies with Brazil as the top producer.
Bloomberg News reported on Monday that India was considering allowing exports of 6 million tons in a first tranche, and another about 3 million in a second, based on the pace of production.
Shipments from the South Asian nation used to be unregulated, but the country imposed limits last year to ensure sufficient local supply after output concerns. The government has extended the curbs until October next year. However, the restrictions don’t apply to sales to the EU and the US under some quotas.
Production in India is forecast at 35.5 million tons this year, according to the Indian Sugar Mills Association. The country counts Indonesia, Bangladesh, Malaysia and the United Arab Emirates among its customers. India is also the world’s biggest consumer of sugar.
Indian sugar mills have already contracted to export as much as 2.2 million tons, said Rahil Shaikh, managing director of Meir Commodities India Pvt., which traded about 500,000 tons of sugar in the domestic and overseas markets in the 2021-2022 season.