In a statement on Wednesday, the Indian government said it would limit sugar exports to 10 million tonnes for the marketing season, which will run until September to keep prices under control. Vendors have also been asked to apply for “specific permission” from the authorities for any sugar exports between June 1 and October 31.
India is the world’s largest producer of sugar and the second largest exporter after Brazil. The Narendra Modi government said steps need to be taken to maintain sugar stocks in the country following “unprecedented export growth” last year and current season. The move to limit exports comes at a time when annual retail inflation in Asia’s third-largest economy reached 7.8%, its highest level in nearly eight years, in April. It is also another sign of rising food protectionism around the world, as major producers are holding back agricultural exports, adding to the supply shock caused by Russia’s invasion of Ukraine in February. . Ukraine and Russia account for about 30% of all wheat exports.
In the current marketing year, which runs from October 2021 to September 2022, Indian sugar mills have so far signed export contracts of about 9 million tonnes. In the previous 12-month period, the country shipped 7 million tons of sweetener abroad, which was the highest amount in recent years, according to government data.
White sugar futures traded up 1% at $ 556.50 per tonne on Wednesday in London. They have gained 13% since the beginning of January and are about 26% more than at this time last year.
The Russian invasion of Ukraine has contributed to a historic shock in commodity markets that will keep world prices high until the end of 2024, the World Bank said last month. Food prices are expected to rise 22.9% this year, driven by a 40% increase in wheat prices, he added. Earlier this week, Malaysia decided to restrict chicken exports to its neighbors, saying “the government’s priority is our own people”. And a few days earlier, India had banned wheat exports, as life-threatening heat waves are holding back production and pushing local prices to record highs. The country is the world’s second largest producer of wheat after China, but it is not a major exporter of raw materials. Speaking at the World Economic Forum in Davos on Tuesday, Indian Trade Minister Piyush Goyal said “our export regulation should not affect the global market.”
“We continue to allow exports to vulnerable and neighboring countries,” he added.
Despite these guarantees, India’s restrictions underscore the fragility of the world food situation. Global buyers hoped that Indian wheat shipments would help fill the gap created by the war in Europe, which has affected vital agricultural export shipments.
However, there was good news last week. Indonesia said it would lift the ban on palm oil exports, which went into effect in April. The Southeast Asian country is the world’s largest producer of the product, which is widely used as a cooking oil and in many foods.