India Follows Wheat Ban with Sugar Cap

By Glenn Dyer | More Articles by Glenn Dyer

After its wheat export ban, India has now capped sugar exports to safeguard its own supplies and ease inflationary pressures which threaten to trigger rising social unrest.

The wheat ban started on May 13 and on Wednesday the government imposed a cap on sugar shipments at a maximum of 10 million tonnes.

Unlike the wheat ban, the sugar cap will have a much bigger impact. India is a small wheat exporter (but big producer). In sugar, India is

the world’s biggest sugar producer and the second biggest exporter behind Brazil. Thailand is another major producer and exporter. Australia is a medium-ranked producer and exporter.

The cap is sure to have an impact on global prices which ended at 19.97 US cents a pound for the Number 13 white sugar contract in New York (the global indicator price). London white sugar prices rose 1% on Wednesday evening (Sydney time) to $US557.40 a tonne.

The wheat ban which has limited Indian shipments to existing export deals said to be around 4.4 million tonnes of a forecast 10 million tonnes of exports, which is not a lot compared with the larger tonnages from Australia, the US (both expected to ship smaller amounts in the coming season), the EU and Argentina. Wheat exports from Russia and Ukraine had been slashed by the Russian invasion.

The sugar cap is to apply in the current season which ends September 31. The cap starts June 1 and will last until the end of October. It is the first time sugar exports have been limited in six years by India.

The government has previously estimated the 2022 harvest would see 35 million tonnes of sugar produced with exports around 9.5 million tonnes. But there has been a spate of new export deals that threatened to lift exports to well over 10 million tonnes.

Exporters will now have to lodge applications for special release orders to be allow to sell offshore.

According to the US Department of Agriculture Australian sugar production and exports are both forecast to rise in the 2022-2023 season because of the improved rain in northern Queensland.

An April report said “Australia’s sugar production is forecast to increase to 4.45 million tonnes in marketing year 2022/23, from an estimated 4.12 million tonnes in 2021/22.

“This increase is due to an expected rise in sugar cane crush to 32 million tonnes in 2022/23, from an estimate of 30.1 million in the previous year.

“The increase in production is driven by anticipated improvements in sugar cane yields, mainly in the northern tropical regions of Queensland, which has experienced much improved crop growth conditions for the first nine months of the season.

“Raw sugar exports are forecast to increase to 3.45 million tonnes in 2022/23 from the prior year estimate of 3.2 million tonnes, while refined sugar is expected to remain stable at 100,000 tonnes.”

The value of exports in the coming year has been forecast to rise to around $A2 billion but the Indian ban seems certain to boost that gross figure.

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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