India has cut its sugar export target for the current marketing year, as two straight years of drought in the main producing belt have firmed domestic prices and dissuaded sugar mills to explore overseas sales.
At the start of the current season on October 1, mills were expected to ship around 3.2 million tonnes, but a gradual increase in local prices with the progress of cane crushing season made mills focus on local markets.
India, the world’s second-biggest sugar producer after Brazil, is likely to sell 1.5 million tonnes overseas in the year ending September 30, 2016, far short of the initial target.
The South Asian nation is expected to produce 25.2 million tonnes in 2015/16, down 11.5 percent from the previous year, showed the latest food ministry update.
The lower output means that the world’s top consumer of the commodity will open the new season in October with a stock of around 7 million tonnes as against 8.9 million tonnes in 2015/16.
India’s domestic consumption is pegged at 25.6 million tonnes, according to the update.
“We expect domestic sugar prices to go up in the next couple of months,” Food Minister Ram Vilas Paswan said.
He said the government had taken precautionary steps by restricting limit to hold stocks for sugar. “There is no panic in the sugar market,” said Paswan, assuring ample supplies in the local markets.
Retail prices have gone up by 43-48 percent in various markets, while prices rose as high as 82 percent in some retail markets in South India.
In Mumbai, average ex-mill prices quoted 3,350 rupees per 100 kg in April, up 44 percent from a year ago, traders said. An official of the Indian Sugar Mills Association (ISMA) ruled out any immediate ban on sugar exports from India as local prices have started acting as a disincentive to overseas sale.