India to curb its sugar exports amid uneven rainfall this year that disrupted production

India is set to continue its ban on sugar exports for another year as it faces potential reductions in cane production, according to government sources. As part of its strategy, New Delhi is also considering an increase in the purchase price of ethanol from sugar mills to enhance biofuel availability. This move is expected to impact global sugar supplies, potentially increasing prices in international markets, particularly with Brazil also experiencing reduced output due to drought.

The government's priority is to meet domestic sugar demands and achieve its ethanol blending targets, aiming to integrate 20% ethanol into gasoline by the 2025-26 fiscal year, up from the current 13%-14%. There are plans to raise the ethanol procurement price by over 5% for the upcoming marketing season starting in November.

During the current season, which began on October 1, 2023, India imposed its first sugar export restrictions in seven years, allowing only 6.1 million metric tons to be exported—significantly less than the previous season. The country's sugar production for the 2024-25 season is anticipated to drop to 32 million metric tons, down from 34 million, due to uneven rainfall affecting major producing regions like Maharashtra and Karnataka.

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This expected decline in Indian sugar exports, coupled with lower production forecasts for Brazil, suggests that global sugar prices may rise, impacting worldwide supply dynamics.