Sugar prices soared by 10% in March due to supply constraints and the exhaustion of the March sales quota by Indian mills, one of the world's leading exporters.
Refined sugar prices hit a decade-high, while the raw variety is nearing its costliest in over six years.
The surge was triggered by India's cut in sugar exports due to rain damage to the sugar cane crop and increased use of sweeteners for biofuel production.
Currently, Maharashtra Spot prices for M sugar are between Rs 3,620 and Rs 3,800 per quintal.
Strong crude oil prices, hitting a two-week high, and Brazil's fixed rate for state tax on gasoline and anhydrous ethanol have also contributed to the price surge.
Estimates for sugar production in 2022-23 vary, with Tropical Research predicting a surplus of 1.6 million tonnes, S&P Global predicting a surplus of 600,000 tonnes, and the International Sugar Organisation predicting a surplus of 4.15 million tons.
India is expected to produce 34 million tonnes of sugar in the 2022-23 season, with 6 million tonnes expected to be exported. Ethanol diversion is expected to account for 4.5-5 million tonnes of this output. Meanwhile, Europe's sugar output is expected to decrease by 7% to 15.5 million tonnes, while Brazil's output is expected to increase by 4.7% to 33.58 million tonnes.
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