India, the world’s biggest sugar producer after Brazil, is unlikely to export the sweetener for up to three years as high production costs price shipments out of the global market and a drought in major growing regions squeezes output.
A lack of shipments from India, which exported sugar in the last two years, would support global prices now trading near 2-year lows on a world surplus estimated at about 8 million tonnes.
As the world’s biggest consumer of sugar, India is a key player in the global market and shifting weather conditions can make it an exporter one year and significant importer the next.
India’s imports in 2008/09 and 2009/10 drove a near tripling in global sugar prices, while its exports in subsequent years helped to halve prices from a 30-year high. The Indian sugar year runs from October 1 to September 30.
“Current prices are not viable for exports,” Abinash Verma, director general of the Indian Sugar Mills Association (ISMA), told Reuters.
“As of now, no, we are not exporting. If the prices remain the same, then it will not be viable for us to export.”
Indian sugar futures were trading at 3,156 rupees per 100 kg by 10:26 a.m., while in London May futures settled at $495.60 a tonne on Tuesday.