India likely to keep lid on sugar exports as output dips

India is not looking at allowing more sugar exports, government and industry officials said on Thursday, dampening speculation that the world's biggest producer of the sweetener would permit a second tranche of overseas shipments.

India, the world's biggest sugar exporter after Brazil, exported a record 11 million tonnes in the previous season to Sept. 30, 2022.

But the government has allowed sugar mills to export only 6.1 million tonnes of the sweetener in the current season that began on Oct. 1 2022. Food price inflation was high at the start of the season, prompting curbs on exports.

But the authorities had said they could take a view on a second tranche of sugar exports after getting a clearer idea about local production.

Mills have already contracted to export about 5.6 million tonnes, and producers, traders and industry officials were expecting the government to allow an extra 2-4 million tonnes of overseas shipments.

But expectations of a drop in sugar output have dampened prospects of any additional exports during the current 2022-23 season, government and industry officials said.

Lower sugar exports from India could raise global prices , and allow rivals Brazil and Thailand to increase their shipments.

"Sugar cane yields were far lower than last year. The production is not sufficient to permit additional exports," said an official with direct knowledge of the matter. He did not wish to be named as he is not authorised to talk to the media.

"It is not possible to fulfil the industry's demand of 3-4 million tonnes. We can't allow even additional exports of 1 million tonnes," said another official, who declined to be named.

Global trading houses were initially expecting that India would allow 8 to 9 million tonnes of sugar in the current year ending on Sept. 30, 2023.

But adverse weather surprised the industry. The country's sugar production was initially projected to rise to a record 36.5 million tonnes, far above local demand of 27.5 million tonnes.

But now the production estimate has been cut to 34.3 million tonnes.

Reuters was the first to report in December on the likely drop in production.

"We are getting divergent views on production. We will get a far better idea about production in the next month or so," Food Secretary Sanjeev Chopra told reporters on Thursday.

One industry official said there was a proposal to allocate an additional export quota of around 400,000 tonnes to sugar mills that are making ethanol directly from sugar cane juice.

But even that proposal is unlikely to be approved before end-February as the government would prefer to see actual production numbers before making a decision.

"The government may not be able to allow even small quantity if production numbers continue to be revised lower," the industry official said.

India mainly exports sugar to Indonesia, Bangladesh, Malaysia, Sudan, Somalia and United Arab Emirates.