Report: India’s Export Move Causes Sugar Prices to Plummet to Three-Year Low
India’s Decision to Export Sugar Impacts Global Prices
Sugar prices hit a three-year low on Monday as India, the world’s second-largest sugar producer, announced plans to export 1 million metric tons of sugar in the current season, which ends in September. This decision aims to support struggling sugar mills in India and stabilize domestic sugar prices, which have been under pressure in recent months.
Impact on Global Prices
The unexpected announcement of sugar exports by India has put pressure on global prices. Warren Patterson, the head of commodities strategy at ING, commented that the news is likely to keep prices down. White sugar futures on the ICE exchange dropped to $470.20 a ton, the lowest since September 2021. This led to a 1% decrease, with prices settling at $473.60 a ton. Overall, this has resulted in losses exceeding 5% for the year. Raw sugar futures were not traded due to a U.S. holiday but closed down 1% at 18.22 cents per lb on Friday.
Production and Consumption Trends in India
Leading trade houses in India predict that this season’s sugar production could fall to around 27 million tons from 32 million tons last year, dipping below the annual consumption of more than 29 million tons. Notably, India did not permit exports in the previous season. While there were expectations of India producing around 27 million tons this season, some trade houses had differing views, with one promoting the idea of higher output. Despite the current decrease in production, Indian sugar mills are hopeful for a recovery in the upcoming season.
Global Factors Affecting Sugar Prices
Apart from India’s export decision, sugar prices have been influenced by concerns that Thailand might increase sugar exports. This speculation arose after Thailand suspended syrup shipments to China. China has requested Thailand to inspect multiple factories before considering lifting the ban on sugar syrup and premixed powder exports, which was imposed last month. These global factors have added to the downward pressure on sugar prices.
Other Soft Commodities
In addition to sugar, London cocoa prices experienced a 0.6% drop to $98,905 a ton, while robusta coffee prices saw a 1% increase to $5,057 a ton. The soft commodities market continues to be influenced by various global developments and trade dynamics.