(May 14): India, the world’s second-largest sugar producer, has banned exports for more than four months, according to an official notice, as the government seeks to protect local supplies.
The move follows a cut in output estimates from a major millers’ group. India’s gross sugar production is forecast at 32 million tons in the season ending Sept 30, down from an earlier projection of 32.4 million tons, the Indian Sugar & Bio-Energy Manufacturers Association said last month.
The country’s next harvest, which starts around October, could be also affected by a lower-than-average monsoon. The annual rains that start next month are expected to be curbed by the looming El Niño weather pattern. The country is also a major fertiliser importer and is grappling with a spike in global prices driven by the war in Iran.
The government in April had ruled out curbing overseas sales. However, the notice — which is dated Wednesday — reversed those plans, prohibiting exports through Sept 30 aside from limited exceptions, including for ships that are already loading.
Raw sugar futures in New York slumped as much as 2.3% to to 15.022 cents per pound on Thursday. White sugar in London declined as much as 2.4%.
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The market had largely priced in India’s export ban, limiting the immediate disruption to physical flows, said Claudiu Covrig, the lead analyst of Covrig Analytics. Physical sugar demand across East Africa is slowing, with white sugar imports easing across key destinations and inventories beginning to accumulate at ports, he said.
The global market has been awash with supply, with benchmark sugar futures in New York reaching a five-year low in February this year. However, prices have recovered about 15% from those levels, and some analysts are now predicting a deficit in 2026-27. The war in Iran has also stoked global demand for biofuels, which some countries make from sugar.
India’s sugar exports have been a major swing factor in the global market in recent years. The country started limiting sugar exports following a poor crop in 2022-23, issuing annual quotas for permitted sales. This season, the government permitted an initial 1.5 million tons for export in November and expanded that by 500,000 tons in February.
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The ban on exports could limit India’s sugar shipments to about 700,000 tons in the current season, compared with earlier expectations of about 1.2 million tons, according to Rahil Shaikh, the managing director of MEIR Commodities India Ltd.
“The move will likely tighten global sugar trade flows and support prices amid recent forecasts for a worldwide deficit in the 2026-27 season,” Shaikh said. The curb will potentially weigh on domestic rates, he added.
Trade policies have been volatile across other farm commodities, as well. In recent months, New Delhi relaxed export restrictions on wheat that have been in place for more than three years.
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