India may stop sugar exports in the coming years, analysts say it will push up sugar prices and affect the global sugar trade pattern

According to recent reports from media outlets such as India Today and Reuters, the impact of El Ni ñ o and the surge in ethanol demand may make it difficult for India to resume large-scale sugar exports for at least three seasons in the future. Analysts believe that this will further tighten global sugar supply, push up sugar prices, and affect the global sugar trade pattern.

India was once the world's second-largest sugar exporting country. In the five seasons ending in 2022-2023, the average annual export volume is 6.8 million tons, accounting for approximately 10% of the global trade volume. But the situation during this crushing season has changed significantly: after exporting about 800000 tons, the Indian government announced a ban on sugar exports until September 30th.

Several traders and industry insiders have stated that due to factors such as tight sugarcane supply, India will have almost no excess sugar available for export in the coming years. According to reports, many impoverished households in India consider sugar as a cheap source of calories, making it highly politically and livelihood sensitive in India. The government is expected to continue to be cautious about sugar exports. Some traders say that if the rainfall is lower than expected, India may not be able to return to the international sugar export market for at least three years. Meteorological agencies predict that this year's El Ni ñ o phenomenon may lead to the lowest monsoon rainfall in India in 11 years.

In addition to weather factors, the ethanol blending fuel policy vigorously promoted by the Indian government has further compressed the supply of sugar raw materials. To reduce dependence on imported crude oil, India is accelerating the promotion of flexible fuel vehicles, with the goal of achieving a 20% ethanol blending ratio in gasoline. In the past few years, India has continuously shifted sugarcane towards ethanol production, and domestic sugar factories have continued to expand their ethanol production capacity. According to relevant sources, India's domestic demand for ethanol is growing strongly, and the supply of raw materials that can be used for sugar production will further decrease.

If El Ni ñ o causes a significant decrease in sugarcane production, India may be forced to restart sugar imports in the future. The last time India imported sugar was during the 2016-2017 and 2017-2018 crushing seasons, when it was also affected by drought caused by El Ni ñ o.