India’s sugar crop is poised for another bumper year, thanks to above average monsoon rains in Maharashtra, the country's second largest sugar producing state. This is good news as India’s strong crop could help address shortfalls in Brazil and Europe, sugar-producing regions that experienced challenging growing seasons this year.
Against this backdrop, higher sugar production out of India, the world’s second largest producer, will impact both local and global prices, ahead of the country’s 2022/23 sugar export policy statement, which is expected this week.
Currently, Gro’s Climate Risk Navigator for Agriculture, aggregated to Maharashtra’s sugarcane-growing areas, shows that accumulated rainfall, between June 1 and September 19, was 33% above the 10-year average. When comparable amounts of rainfall fell in the state in 2013/14, Maharashtra’s production rose 11.4% versus the year prior and India’s total sugarcane production increased 7.3%. In 2010/11, comparable monsoon rains led to a 33.6% jump in production in Maharashtra. Overall Indian sugar production rose 16.9% that year.
A previous Gro analysis shows that sugarcane production in Maharashtra is very closely linked to India’s monsoon rains. India’s top sugar producing state Uttar Pradesh, where the crop’s success is not linked to monsoon rains, has seen relatively steady sugarcane production for the past 20 years.
India’s expected uptick in production comes as a second year of record drought threatens to cause another short crop in Brazil, the world’s largest producer and exporter. Brazil’s center south region sugarcane production is currently down 11% versus 2021/22. Top sugar producing state of São Paulo state, which produces more than half of Brazil’s total sugarcane, has experienced severe levels of drought since early 2020, according to Gro’s Climate Risk Navigator.
Additionally, this summer's hot and dry weather in Europe, the world's third-largest sugar producer, caused smaller sugar beet yields and lower sugar production, meaning that Europe will require more sugar imports than usual.
In May, as India was grappling with high domestic sugar prices, the Indian government capped sugar exports to 10 million tonnes, but later allowed another 1.2 million tonnes to help the country’s sugar mills from defaulting on export contracts. This took the total export quota for the 2021/22 marketing year to 11.2 million tonnes. India's sugar exports stood at 7.0 million tonnes in 2020/21, 5.9 in 2019/20 and 3.8 in 2018/19.
Throughout this year India has instituted numerous protectionist measures to curb inflation from multi-year highs. Most recently, it banned broken rice exports, while also placing a duty on other rice varieties as Gro highlighted here. Wheat exports were curbed back in May followed by wheat flour in late August. The country has also allowed duty-free imports of soybean oil and sunflower oil.