Rising domestic prices means India, the world’s second-largest supplier, will export less, big global trading houses anticipate.
India will export less than 50 percent of what the government ordered, according to ED&F Man Holdings and Olam International, Bloomberg reported.
While expectations for Indian exports were bearish for the market six months ago, the estimates are now being lowered, it quoted John Stansfield, an analyst at soft-commodities trader Group Sopex, as saying.
Indian sugar prices have rallied more than 30 percent in the past five months on expectations the current crop will be smaller than initially forecast. The government has ordered sugar mills to export 4 million tonnes in the current 2015-16 season, but traders have said far less amount will be shipped out.
ED&F Man expects the shipments to be less than half of what the government wants, while Olam sees overseas sales of 1.5 million tons at current, according to Bloomberg.
El Nino-induced dry weather is reducing production in India, with the nation’s sugar mills association cutting its 2015-16 output estimate by 1 million tons to 26 million tons earlier this month, it said.