India, the world's biggest sugar producer,
could cap exports of the sweetener at 6 million to 7 million tonnes in the
2022/23 October-September season, about one-third less than the total to be
shipped out in the current season, industry and government sources said. They
asked not to be named as they were not authorised to speak to media.
A government spokesperson did not
immediately respond to a request for comment.
The curbs on exports by India, also the
world's second-biggest sugar exporter, could further lift benchmark white sugar
prices, which are already trading near 5-1/2 year highs, traders said.
July raw sugar rose 1.88% to 18.93 cents
per lb and August white sugar jumped 1.77% to $568.70 a tonne after the Reuters
report.
Meanwhile, shares in leading sugar
producers such as Shree Renuka Sugars , Bajaj Hindustan Sugar and E I D-Parry
(India) Ltd fell between 2% and 6%.
Among factors underpinning global sugar
prices this year are lower sugar output in Brazil, a leading producer and the
biggest exporter, and crude oil prices at multi-year highs. Higher crude oil
prices encourage sugar mills to divert more cane to produce ethanol for
blending into gasoline.
Brazil's sugar production is set to rebound
during the current season, but with restricted exports from India, traders do
not expect prices to come down and they instead could go higher.
"There is a need to regulate exports
to avoid any kind of panic in the market," said a senior government
official with knowledge of the matter.
While the sources expected next season's
export cap to be set between 6 million and 7 million tonnes, the exact quantity
will be fixed near the start of the 2022/23 season, they said.
The government will look at the performance
of the monsoon before fixing the quota, they added.
Monsoon rains in sugarcane growing areas of
the western India state of Maharashtra, the biggest producer in the country,
were 60% below average since the start of the rainy season on June 1, according
to weather office data.
New Delhi on May 24 imposed restrictions on
sugar exports for the first time in six years with a cap for this season of 10
million tonnes.
Record exports in the current season could
bring down inventories to 6.5 million tonnes on Oct. 1, when the next 2022/23
season starts, versus 8.2 million tonnes a year earlier, industry and
government estimates show.
Aditya Jhunjhunwala, president of the
Indian Sugar Mills Association (ISMA), a producers' body, has requested that
the government allow mills to export 8 million tonnes of sugar next year, as
output could exceed this year's record 36 million tonnes, according to a letter
seen by Reuters.
The letter also urged the government for an
early decision on next year's export quota to help mills cash in on firm global
prices.
The government should boost exports in the
first few months of the new season and take a call on the export quota once the
production scenario becomes clear sometime in April 2023, the ISMA said in a
statement.
India mainly exports to Indonesia,
Bangladesh, Sudan, the United Arab Emirates, Nepal and China.
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