India's rice export ban causes fears sugar may be next
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The globe has grown increasingly reliant on sugar exports from India, and uneven rainfall throughout India's agricultural belts has fueled fears that sugar output may fall short.
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A worker stands on a mount of sugar cane on the outskirts of Bareilly, India on Tuesday March 23, 2021. (AP)
Following India's prohibition on some rice exports in order to manage local prices, merchants are concerned about another staple, sugar.
India, the world's largest rice exporter, prohibited imports of non-basmati white rice in Late July in order to keep local prices stable ahead of the general election in early 2024.
Rice is essential for almost half the worldwide population, with Asia using around 90% of the global supply. Based on expectations that the return of El Nino may harm crops, prices have drastically increased in the last two years.
The globe has grown increasingly reliant on sugar exports from India, and uneven rainfall throughout India's agricultural belts has fueled fears that sugar output may fall short, perhaps for the second year in a row, in the season beginning in October.
This may impede the country's capacity to export. The government has already prohibited the export of wheat and some rice varieties to safeguard domestic supply and keep prices low, adding to the strains on global food markets already strained by bad weather and the war in Ukraine raging on.
Read more: Unlike China, India will not become an economic superpower: Report
Henrique Akamine, head of sugar and ethanol at Tropical Research Services stated that “The worry now is that the government will probably follow suit and do something similar regarding sugar,” seeing as it is concerned about food security and inflation.
According to Aditya Jhunjhunwala, president of the Indian Sugar Mills Association, sugar cane fields in the primary producing regions of Maharashtra and Karnataka did not get significant rain in June, resulting in crop stress. Sugar output is expected to fall 3.4% year on year to 31.7 million tons in 2023-24, according to the organization. Nonetheless, Jhunjhunwala believes domestic demand can be met.
Meanwhile, India plans to increase its usage of sugar for biofuel. According to the group, mills are diverting 4.5 million tons to manufacture ethanol, a 9.8% increase from the previous year.
Bruno Lima, head of sugar and ethanol at StoneX expressed that at this point "India might not release any export" and will have to "follow closely if the ethanol diversion will be done in full.”
