Located in Asia, India is the second largest sugar producer and sugar exporter in the world. The country on average exports around 109.8 lakh tonnes of sugar every year and more than 50 countries around the world depend upon it, in order to meet their domestic sugar needs.
Enjoying high demand for sugar in the international market, Indian sugar millers and exporters exported more than 11 million tonnes of sugar in the 2021-22 sugar season and this prompted the government to take action to ensure adequate supplies for domestic consumption.
Consequently, the GOI moved sugar from “free to trade” to the “restricted” category, and as a result, the sugar exporters now needed to obtain permissions for overseas sales, and the export quota was set at 100 lakh metric tonnes for the 2021-22 sugar season.
However, with improvement in the sugar situation and after ensuring adequate stocks for domestic consumption, the Government of India on the 5th of November 2022, resumed the exports of the sweetener and allowed sugar millers and exporters to export sugar up to 6mt till the end of May 2023 and with this, the demand for Indian sugar skyrocketed in the global market.
Enjoying high demand, Indian sugar millers and exporters started signing contracts with international buyers, and those who already signed contracts prior to GOI’s announcement began re-negotiating them to leverage the high prices being offered in the global markets.
Amid high demand and sky-high prices for Indian sugar, the sugar millers and exporters of the country did good business, and after exporting three-fourths of the quota, they are now holding on to the remaining quota and are eyeing to export the same once prices of Indian sugar soar in the global markets.
A Look At The Figures
With projections of a bumper harvest from Brazil, sugar prices in the benchmark indices have gone down a bit. After hitting the ceiling, export prices of sugar have come down by 3%-4% in the global markets. However, it is still unclear as to how long will this downward trend stay, and hoping the prices to bounce back, Indian sugar millers are waiting to export sugar.
Currently, the prices of Indian sugar stand at Rs 37- Rs 39 per Kg which is 12%-13% higher than the prices offered in the domestic market. However, after seeing a high of Rs 39- Rs 40 per Kg, the Sugar Exporters and traders are in a wait-and-watch mode and with five and half months still remaining, they have all the reasons to do so.
The Bottom Line
India is the second largest sugar producer and sugar exporter in the world and Indian sugar is one of the many agro-commodities that enjoy a high demand globally. After the Government of India resumed sugar exports on the 5th of November, 2022, sugar exporters and millers of India took no time to make use of the opportunity and riding on the back of high demand exported three-fourths of the allocated export quota of sugar within a month and a half. After doing so, they are in a wait-and-watch mode and are aiming to complete the remaining quota once the prices rise in the global markets.
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