Located in Asia, India is the largest sugar exporter in the world and it ranks behind Brazil in terms of sugar production. Owing to favorable weather conditions and sufficient rainfall, India has a bumper harvest every year and this helps the sugar exporters of the nation export bulk sugar to 50+ countries after meeting the domestic demand.
India plays such a significant role in the global sugar market that any factor influencing India’s sugar production and exports reflect sharply on global prices and on hopes of reduced sugar output and India’s volatility on exporting more sugar in the current sugar season, global sugar prices are ruling at an 11-year high.
Further, as speculations of El Nino during the second half of the year circulate in the market, market participants are doubtful over India’s domestic sugar production which is adding to the pressure on sugar prices. The El Nino phenomenon can cause droughts and deficient rainfall and this has made people worried of India’s sugar production and in turn of global sugar prices.
However, officials believe that despite El Nino weather pattern, India will be able to produce enough to meet local demand as well as export the surplus.
Statements Of The Officials
While market participants remain worried of the forecasts suggesting El Nino phenomenon, government officials tried to diminish the worries and fears revolving around India’s sugar production.
Mr. Subodh Kumar Singh, Joint Secretary at the Department of Food and Consumer Affairs said that according to India Meteorological Department (IMD), the country is expected to have a normal monsoon and hence India’s sugar production is also expected to be normal.
He further added that, while no weather disturbance is anticipated at the moment, even if something crops up that impacts the domestic sugar production, there will not be a huge shortage of sugar. Boosting the morale of sugar exporters, he concluded his statements by saying that irrespective of what happens, India would be able to export some volumes of quality sugar next year.
The Bottom Line
To summarize, Indian nation enjoys a prominent position in the global sugar market and any impact on the country’s sugar production and sugar exports reflect sharply on global sugar prices. Presently, the prices are already ruling at an 11 year high as Indian sugar mills closed early due to untimely rains and the probability of domestic sugar production being hampered by El Nino is further putting pressure on the prices.
The forecasts that India and Brazil are going to brace El Nino phenomenon is leading to negative market sentiments and market participants believe that owing to this India will witness a fall in domestic output because of which it won’t be able to export additional volumes of sugar. Officials are trying to allay public fears at the moment and they have cited IMD’s predictions in this regard as well.
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