Located in Asia, India is the largest sugar exporter and second largest sugar producer in the world. It exports bulk sugar to over 50 countries around the world and riding on the back of strong global demand, Indian sugar exporters have a good business every year.
Sugarcane is a water-guzzling crop and suitable weather conditions like decent monsoon rains help India have a bumper sugarcane harvest, year after year. However, things might be different this time around as lower than usual rainfall in key sugar producing states like Maharashtra and Karnataka can dent domestic sugar output.
Indian Sugar Mills Association (ISMA’s) Statements
On 2nd of August 2023, Wednesday, leading trade body, Indian Sugar Mills Association (ISMA), commented that India’s domestic sugar production could drop to 31.7 million metric tonnes in the 2023/24 marketing year on account of lower rainfall and dry weather conditions.
The ISMA also commented further that key sugar producing states like the western state of Maharashtra and neighboring Karnataka, who together account for more than half of India’s total sugar output might witness a drop in production.
Weather Department’s Data show Similar Projections
According to the data provided by the weather department, key sugarcane growing districts of Maharashtra and Karnataka have registered a rainfall deficit of 39% in the current monsoon season.
Low rainfall is likely to tinker with the sugar production and the Weather Department’s data should raise alarms in this regard.
Lower Sugar Output behind GOI’s Decision to cap Sugar Exports
The drop in domestic sugar output is the reason behind Government of India’s (GOI’s) decision to cap sugar exports at 6.1 million tonnes. Market participants believe that the government might allow 1 to 2 million tonnes of sugar exports in the next season or avoid sugar exports altogether as it remains committed to keep the prices of the sweetener in check in the domestic markets of the country.
The Bottom Line
Favorable weather conditions like ample monsoon rain help the Asian nation-India, harvest bulk sugarcane every year. However, things are different this time around as ISMA has predicted that domestic sugar output is set to fall by 3.3% to stand at 31.7 million metric tonnes in the 2023/24 marketing year on account of lower rainfall.
Key sugar producing states, like the western state of Maharashtra and Karnataka have registered a rainfall deficit of 39% in the current monsoon season so far, which is likely to tinker the domestic sugar production and this remains the reason behind why the GOI has capped sugar exports at 6.1 million tonnes for the first half of 2023.
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