India extends curbs on sugar exports to calm domestic prices

 India on Wednesday extended its restriction sugar exports beyond October, as the world’s second-biggest producer tries to bring down domestic prices by increasing supplies ahead of key state elections.

India’s curb on exports would be likely to increase benchmark prices in New York and London , where markets are already trading around multi-year highs, triggering fears of further inflation in food prices globally.

Export of raw sugar, white sugar, refined sugar and organic sugar under some codes would be restricted beyond October, according to a notification issued on Wednesday by the Directorate General of Foreign Trade (DGFT).

India’s sugar export restrictions have been in place for the past two years. During this time, India allocated export quotas to mills.

In the last season that ended on Sept. 30, India allowed mills to export only 6.2 million metric tons of sugar, after permitting them to sell a record 11.1 million tonnes in 2021/22.

Government sources told Reuters in August that the South Asian country would ban mills from exporting sugar in the season beginning in October, halting shipments for the first time in seven years, as a lack of rain had cut cane yields.

“The export restriction was expected. Instead of the usual one-year limit, this time the government has imposed an indefinite export restriction,” said a Mumbai-based dealer with a global trade house.

“It is unlikely to allocate export quotas this year, as its goal is to reduce prices before the elections.”

Five Indian states will elect new legislatures next month, beginning a process of regional polls ahead of national elections due next year.

India surprised buyers by imposing a ban on exports of widely consumed non-basmati white rice in July, following a ban on broken rice exports last year. New Delhi also imposed a 40% duty on exports of onions.

Sugar prices in India are near their highest in more than 7 years and production is forecast to drop 3.3% to 31.7 million tons in the 2023/24 because of patchy monsoon rains in the top cane growing states, Maharashtra and Karnataka.

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