A slow start to India’s monsoon season could reduce 2023/24 sugarcane production in some of the country’s key producing regions, potentially limiting India’s sugar exports and giving a further boost to global prices.
World sugar stocks have fallen for the past two years and are currently at the lowest level since 2011. That has helped push sugar futures prices up by 20% so far this year to multi-year highs. India, the world’s No. 2 sugar producer and the largest sugar consumer by far, can have a substantial impact on global sugar supplies as it periodically shifts from being a net exporter to a net importer.
In Maharashtra and Karnataka states, which together account for about one-third of India’s total sugar production, the sugarcane crop thrives on the abundant monsoon rainfall from June to September. However, this year’s poor precipitation during the crop’s early vegetative growth period could result in lower yields and reduced output.
In Karnataka, June accumulated precipitation was 60% below the 10-year average, according to Gro’s Climate Risk Navigator for Agriculture. While precipitation rebounded in July — rainfall was 72% above average for the month — the deficit in the plants’ early stages could already have damaged the crop.
Maharashtra’s sugarcane-growing areas also saw a drier-than-average June followed by heavy rains in July. Accumulated precipitation for the state’s sugarcane areas from June to mid-August is now tracking at 16% above the average, as seen in this Gro Navigator display.
2021 also saw below-average rainfall in June, which caused India’s total sugarcane production that season to fall 13% year over year. Exports dropped by nearly half that year.
Uttar Pradesh is India’s largest sugarcane growing state, but its production quantities are not as closely correlated to the amount and timing of monsoon rains as is production in Maharashtra and Karnataka, a previous Gro analysis found. As a result, Uttar Pradesh has seen relatively steady sugarcane production for the past 20 years.
India has previously restricted 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, sugar shipments are 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.
Any shortfall in India’s sugar production would make the sugarcane crop in Brazil, the No. 1 producer, even more critical. Brazil has seen the highest level of cumulative precipitation in 20 years, as shown in this display from Gro’s Climate Risk Navigator for Agriculture, weighted for sugarcane area in Brazil’s main growing states. As a result, sugarcane production in Brazil’s Center South region is currently running 20% above year-earlier levels.