Sugar prices soaring globally but here’s why your Diwali will still be sweet

The global sugar market is experiencing a remarkable upswing this year, with prices surging to new 12-year highs, exceeding 28 cents per pound. This rise in prices is primarily driven by market perceptions of a supply deficit.

However, the Indian sugar market has seen more modest gains, ranging from 4% to 6%, contingent on the specific region within the country.

India, one of the world's largest producers of sugar, is grappling with lower production levels compared to the previous year. Nevertheless, the month of November carries pivotal significance, as it marks the commencement of the sugar-crushing season. In this period, almost 80% of the sugar mills in Uttar Pradesh will commence their crushing operations.

The Indian government has consistently provided sugar quotas over the past few months, including a fresh allocation for November, aligning with the Diwali festivities.

Consequently, there is an abundance of sugar available in the Indian markets, and expectations are high for a second tranche of sugar to enter the market around November 10 or 11, ensuring ample supply.

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On the global front, some concerns have arisen in countries like Thailand and Brazil. Brazil, a major player in the global sugar market, is increasingly diverting its sugar production towards ethanol, where prices have remained relatively high.

This shift in production is contributing to a potential decline of 1.2% in global sugar production. As a result, the global sugar market may face a deficit of 2.1 million tonne between 2023 and 2024 in terms of the marketing year, which is likely to maintain upward pressure on prices.

Atul Chaturvedi, Executive Chairman of Shree Renuka Sugars, in an interview with CNBC-TV18, weighed in on the situation, pointing out that while international sugar prices are soaring, Indian consumers remain well insulated.

Indian consumers can anticipate a sweet Diwali, as sugar prices in the country are considerably lower, ranging from $470 to $480 per tonne. In stark contrast, neighbouring countries such as Bangladesh and Nepal are contending with significantly higher sugar prices, surpassing $1,000 per tonne.

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