India’s sugar may dominate global market from next fiscal, FY 2020-21

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India may dominate the global sugar market as prospects for next year’s cane crop have brightened due to brimming reservoirs. Bountiful monsoon rains this year have led to above average water levels in reservoirs, which will in turn boost the amount of sugar cane that’s planted, according to industry and Indian government officials. Sugar output in the country is expected to bounce back in 2020-21 from an estimated three-year low this year, they said.

Bumper crops from India, which vies with Brazil as the world’s top producer, have been blamed for causing a global sugar glut, leading to two years of more than 20 per cent declines in world sugar prices. While the market has recovered in 2019, partly on crop setbacks in India, sentiment may worsen again if the country returns to record output.

Major producers, upset by Indian export subsidies, have complained to the World Trade Organization in a bid to get the country to hold back shipments. The WTO is unlikely to be able to resolve the issue quickly, and India is likely to export significant amounts again, Rabobank said.

India’s 120 main reservoirs held about 140 billion cubic meters of water as of Dec. 19, 48 per cent more from a year earlier and about 38 per cent higher than the 10-year average, according to government data. It’s a boon to the cane crop being planted now. 

The acreage in the western state of Maharashtra will be higher than the 843,000 hectares (2.1 million acres) in 2019-20 as better soil moisture and availability of water have been encouraging farmers to plant more sugar cane, said Shekhar Gaikwad, sugar commissioner in the state which is the second-biggest grower in India.

Higher output will boost sugar inventories in the South Asian nation, potentially increasing overseas sales next year after what may be the biggest global shortage seen in four years in 2019-20. India aims to export 6 million tonnes of subsidized sugar this year to cut its huge stockpiles of about 14 million tonnes — enough to meet the country’s local demand for more than six months.

Shekhar Ghosh is consulting editor, Indoasiancommodities.com. He has edited and written for publications like Business India, Business Standard, Business Today, Outlook and many other international publications. He can be reached at shekhar.ghosh@indoasiancommodities.in.

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