Sugar prices in India have jumped by more than 3 percent in a fortnight to their highest level in six years, traders and industry officials said, as limited rainfall in the country's key growing regions raised production concerns for the upcoming season.
This might add to food inflation and discourage New Delhi from allowing sugar exports, supporting global prices which are near their highest in more than a decade.
As per a Reuters report, Ashok Jain, president of the Bombay Sugar Merchants Association said, "Sugar mills are worried that production could fall sharply in the new season because of drought. They are not willing to sell at lower price.
Higher prices will, however, improve margins for producers such as Balrampur Chini, Dwarikesh Sugar, Shree Renuka Sugars and Dalmia Bharat Sugar, helping them make payments on time to farmers, dealers said.
Sugar prices rose to Rs 37,760 ($454.80) per metric ton on September 5, their highest since October 2017. Indian prices are nearly 38 percent lower than the global white sugar benchmark.
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The price rise will dissuade the Indian government from allowing exports in the new season, Jain said.
In 2022, India exported 6.1million tons of sugar and 11.1 million tons in 2021.
Globally speaking, in New York, sugar prices are at 4-1/2 month high whereas in London the prices are at 12 year high.
Indian Sugar Association 2.2 million tons of sugar deficit in 2023-2024. ALVEAN, one of largest sugar traders in the world has estimated 5.4 million tons of sugar deficit and United States Department of Agriculture (USDA) has estimated 2.12 million tons of sugar deficit in 2023-2024.
Sugar prices could rise further in the coming months as stocks are falling, and the peak festive season is approaching, as per a Reuters report.
With Reuters inputs
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