India Bans Sugar Exports as Domestic Prices Rise and Supplies Fall

India, the world’s second-largest sugar producer, announced a ban on sugar exports for the first time in seven years after this season’s erratic monsoon rains are expected to cut into the country’s upcoming sugar harvest.  

India said the export ban is intended to control rising domestic retail sugar prices, which have increased 6% since January 1. Global sugar prices have gained even more, as world sugar stocks drop to the lowest level in more than a decade, as seen in this Gro display. ICE sugar futures — trading at 12-year highs — are up 37% year to date and are 44% above year-ago levels. 

India is the largest sugar consumer in the world, and maintaining adequate supplies and keeping prices in check are high priorities. The country typically holds more than half of the world’s sugar stocks, so the export ban could risk exacerbating food insecurity in countries highly dependent on sugar imports. India mainly exports sugar to Indonesia, Bangladesh, Malaysia, Sudan, Somalia, and the United Arab Emirates.

India has previously limited its sugar exports to help control domestic food price inflation. The government typically decides sugar export quantities before the start of the new marketing year on October 1. For the 2022/23 season, which saw a double-digit decline in India sugar production from a year earlier, sugar shipments were capped at 6.1 million tonnes, down from 11 million tonnes the year before. India has also imposed export restrictions on wheat and wheat flour and much of its rice. 

Shortfalls in India’s sugar production make the sugarcane crop in Brazil, the No. 1 producer, even more critical, as Gro wrote about here. Brazil’s main sugarcane growing regions have seen the highest level of cumulative precipitation in 20 years, according to Gro’s Climate Risk Navigator for Agriculture. As a result, sugarcane production in Brazil’s key Center South region is currently running 24% above year-earlier levels, as seen in this Gro display.

The El Niño global climate pattern, which returned this year, typically brings heavy rains to parts of Brazil, but dry conditions to many areas in Southeast Asia. That can damage production of crops, including sugar, coffee, rice, and palm oil, in Southeast Asian countries, as Gro wrote about here. 

Previous El Niño years in 2015 and 2016 dented the region’s sugar output and drove prices higher. Thailand, the world's No. 3 sugar producer, is also experiencing lower production this year, adding further support to global sugar prices.