Possibility of sugar exports bleak due to fear of reduced production

24-Dec-2024 11:36 AM

The possibility of India exporting sugar this year appears bleak due to the anticipated decline in domestic production, triggered by a combination of adverse weather conditions and a decrease in the recovery rate of sugar.

According to industry analysts, a drought in the previous year and excessive rainfall this year have negatively impacted the sugarcane crop, particularly in key producing states like Maharashtra, Uttar Pradesh, and Karnataka, which together account for more than 80% of the nation's total sugar production.

The primary concern is that for the first time in the last eight years, India's sugar production is expected to fall short of meeting domestic demand and consumption.

The estimated sugar production for the 2024-25 marketing season is expected to be around 270 lakh tonnes, which is significantly lower than the previous season's output of 320 lakh tonnes and about 20 lakh tonnes less than the estimated domestic consumption of 290 lakh tonnes.

This situation suggests that there will be no surplus sugar available for export, a sharp contrast to past years when India was a major exporter of sugar.

The reduction in sugar production is partly due to the impact of erratic weather patterns. Prolonged periods of drought during the previous year, followed by excessive rainfall during the current year, have hindered the growth and recovery of the sugarcane crop.

In addition, many regions experienced high temperatures during the summer, which further stressed the crop, while excessive monsoon rains prevented adequate sunlight, which is critical for optimal sugarcane growth. Consequently, experts expect the yield of sugarcane to decrease by 10-15% in key producing areas.

The domestic sugar industry is likely to rely on the surplus stocks carried over from the previous season to meet local demand, and any shortfall in production may further exacerbate price increases in the domestic market.

If ethanol production (which uses a significant portion of the sugarcane crop) is reduced, the stock available for food purposes may remain at normal levels, but this does little to address the growing gap between domestic supply and consumption.

Given the situation, the possibility of India becoming a sugar exporter in the near future seems uncertain, and the global sugar market could face price hikes if India's production doesn't meet expectations.

This could also lead to India potentially importing sugar in the coming months, a sharp turn from its previous status as a major exporter.