El Nino and delayed monsoon pose threat to sugar prices, exports, production

Meanwhile, India, the world's second-largest sugar producer, is grappling with delayed monsoon rains. The monsoon is yet to cover Maharashtra and enter Uttar Pradesh, key sugar-producing states in India. The delayed monsoon could lead to lower production, which may have a cascading effect on the next sugar season and potentially impact exports.

Speaking to CNBC-TV18, Vijay Banka, MD of Dwarikesh Sugar Industries, expressed concerns about the slow progress of the monsoon and its potential implications for sugar production.

He said, “The meteorological department is upbeat on the normal monsoon but the monsoon has been delayed. So if El Nino does happen, then it could mean lower production from India as well as Brazil.”

Banka added, “If there is deficient monsoon, it is not going to so much impact the crop for 23-24 season, but it will definitely impact the season thereafter. The lower production of sugar would only mean the sugar which will be set aside for export will be lower. So, the government is going to moderate that number. They will regulate the number if the production is lower.”

Despite the challenges posed by weather conditions, Banka highlighted positive signs of recovery in sugar prices since April.

He said, “The global prices have been on 11-year high, but they have found no resonance in the domestic local market, because there is a cap on the export of sugar from the Indian ports. It is not fully reflected in the domestic sugar prices. But having said that, I must add here that while FY22-23 sugar prices are flattish, we have seen some recovery in the sugar prices from April onwards.”

The delayed monsoon presents a crucial challenge for the industry, with lower production potentially affecting the next sugar season and impacting export capabilities.