Here’s why sugar prices have spiked globally

Early this month, India, the second largest sugar exporter, reduced the sugar export quota to 6 million tonnes until May in 2022-23 season compared to 11.2 million tonnes of export in the 2021-22 season that ended in October.

The lowering of the sugar export quota by the government led to a spike in sugar prices and Indian mills, which had entered into contracts with global traders, started renegotiating the exports to gain from the price rise.

According to market estimates, Indian mills have signed agreements to export around 4 million tonnes of sugar from November to February. Sugar mills are asking for a price revision on supply agreements of 4,00,000 tonnes of sugar.

Reports suggested that Indian sugar will be cheaper even after the price revision sought by mills. India exports sugar mainly to Bangladesh, Malaysia, United Arab Emirates, Iraq, Indonesia and African countries.

Last month the government extended the curbs on sugar exports till October 2023 to boost domestic availability and check local prices.

According to the Indian Sugar Mills Association (ISMA), sugar production in the country was estimated at 36.5 million tonnes while the local demand was pegged at 27.5 million tonnes in the 2022-23 season-ending October.

Sugar availability is expected to be higher with a carryover stock of 6 million tonnes from the previous season.

Meanwhile Atul Chaturvedi, Executive Chairman, Shree Renuka Sugars believes that the worst is over.

India recently emerged as the world’s largest producer and consumer of sugar and the world’s second-largest exporter of sugar.

In sugar season (Oct-Sep) 2021-22, a record of more than 5,000 lakh metric tonne (LMT) of sugarcane was produced in the country out of which sugar mills crushed about 3,574 LMT of sugarcane to produce about 394 LMT of sugar (Sucrose).