Tuesday, July 16, 2024

Higher diversion of cane to ethanol to drag India’s sugar output, exports

India’s sugar production and exports for the 2022-23 season starting October are set to decline on likely higher diversion of sugarcane to ethanol production.

The Foreign Agriculture Service, US Department of Agriculture (USDA), in its latest report, has forecast the country’s sugar production at 35.8 million tonnes (mt) for 2022-23 against 36.88 mt in the current sugar season ending September.

The USDA has also forecast a decline in exports at 5.2 mt for 2022-23 against the current year’s expected shipments of a record 8.78 mt.

“India’s production is forecast to decline three per cent to 35.8 mt as less sugarcane is processed for sugar. Consumption is anticipated at a record high with the expectation of continued favourable retail and institutional sugar demand. Imports are unchanged while exports are expected to decline by over 40 per cent given the expected return to normal trade volumes. Record exports are estimated for 2021-22 following global supply shortfalls,” the USDA said.

It expects India’s sugar consumption to increase to 29.5 mt in 2022-23 from current year’s 29 mt.

According to trade sources, Indian exporters have already shipped out 7.1 mt of sugar till April end and have signed contracts for over 8.5 mt.

Export curbs

Recently, the Centre has amended the sugar export policy by placing the commodity under the ‘restricted’ category. Amid overseas sales, India issued a notification curbing exports of sugar to check domestic inflation and to channel more sugar cane into ethanol production, the USDA said. The Government has set ethanol blending target of 20 per cent with petrol by 2023-24.

The exports occurring after June 1 will require special permission from the Directorate of Sugar, Food Ministry. However, the sugar exports destined for the United States and the European Union under its tariff-rate quota and Schedule CXL quotas, respectively, are exempted from this directive. As a result of lower exports, theending stocks are forecast to increase by almost 15 per cent.

Global scenario

Global output of sugar is expected to increase by 1.7 mt to 182.9 mt in 2022-23 on higher output in Brazil, China, and Russia, which is expected to more than offset declines in India and Ukraine, the USDA said.

Global consumption in 2022-23 is anticipated to rise to a new record due to growth in markets including China, India, Indonesia, and Russia. Exports are projected down as the drop in India more than offsets higher exports from Brazil and Thailand. The year-ending stocks are forecast lower as growth in global consumption exceeds the rise in production.

The USDA said China is forecast to import less in favour of drawing down stocks for its consumption. Thailand is expected to draw down stocks in the face of strong global demand.

The above news was originally posted on www.thehindubusinessline.com

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