Bitter-Sweet Taste: Drop in global sugar output may cause 2.118 million ton deficit
World sugar production is seen to be falling by 1.23 per cent at 174.89 million tons, as a result of which sugar deficit is seen at 2.118 million tons, as the sugar balance-sheet for 2023-24 released by the London-based International Sugar Organisation (ISO) gives a bitter-sweet taste.
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World sugar production is seen to be falling by 1.23 per cent at 174.89 million tons, as a result of which sugar deficit is seen at 2.118 million tons, as the sugar balance-sheet for 2023-24 released by the London-based International Sugar Organisation (ISO) gives a bitter-sweet taste.
Significantly, there are a couple of factors to look into, how the rains play out in India in September and October and it's impact on sugar production in the new season.
The next couple of months are crucial especially for India, says the report.
Brazil is talking about record crop, but again the high crude prices can see higher diversion towards ethanol production.
"There are reports of sugar export cut, but these are early days. January, 2024, would be an ideal time to take a call for the rest of the season," says Uppal Shah, Co-founder and CEO, AgriMandi while commenting on the scenario.
Meanwhile, officials said sugar output in Maharashtra, India's top producing state, is likely to fall 14% in n more than a century.
The reduced output could add to food inflation and discourage the Centre from allowing sugar exports, supporting global prices which are already near their highest in more than a decade.
the 2023-24 crop year to its lowest in four years due to lower cane yields following the driest August i
Maharashtra, which accounts for more than a third of India's sugar output, could produce 9 million metric tons in the 2023-24 season (which begins on Oct. 1), down from 10.5 million tons in 2022-23, said industry sources.
They pointed out that Maharashtra, which often surprises the global sugar market with wide swings in production, received 59% lower rainfall than normal during August.
IMD data showed monsoon rains in the top cane growing districts of the western state of Maharashtra and the southern state of Karnataka - which together account for more than half of India's total sugar output - have been as much as 50 per cent below average so far this year.
Maharashtra's output is crucial to India's ability to export, making the outlook for overseas shipments dismal for the coming season, a Mumbai-based dealer with a global trading house said.
In 2021-22 Maharashtra produced a record 13.7 million tons, allowing New Delhi to export a record 11.2 million tons. But, as Maharashtra's output fell to 10.5 million tons in 2022-23, India curtailed exports to 6.1 million tons.
Reports say the Centre might ban mills from exporting sugar in the season beginning October, halting shipments for the first time in seven years.
"Food inflation is a concern. The recent increase in sugar prices eliminates any possibility of exports," said an official.
India's absence from the world market could increase benchmark prices in New York and London that are already trading around multi-year highs, triggering fears of further inflation on global food markets.
India allowed mills to export only 6.1 million tonnes of sugar during the current season up to September 30, after letting them sell a record 11.1 million tonnes last season.
