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New Delhi: The global sugar market is all set to witness a shift as India is most likely to curtail exports this year due to the expected El Niño-led drought and the subsequent fall in production. According to a report by the Exencial Research Partners, sugar output has declined this year by about 18% from its peak in 2022, even as domestic demand has increased to record levels. According to the report, India’s sugar production has fallen to 29.3 million tonnes (MT) in FY25, an 8% year on year decline.
This year, the El Niño-led drought challenge is expected to worsen, with leading sugar producing states- Maharashtra, Karnataka and Uttar Pradesh, expected to see lower rainfall. With consecutive monsoons, the groundwater reserves have been recharged and improved yields, the area under cultivation has expanded by about 2% to 6 million hectares, but that may not be enough if the rainfall is insufficient for the water-intensive sugarcane crop.
Though no export bans or restrictions are currently in place, India is likely to curtail exports given the high demand locally and the expected fall in supplies over the next few months.
According to a Reuters report, India may stay out of the global sugar market for the next three years as farmers consider less water-intensive crops such as soybeans and pulses. This comes as a far cry from earlier, when India accounted for about 10% of global sugar shipments.
If supplies don’t meet domestic demand, India could be forced to import sugar from the global markets as it did between 2016 and 2018, pushing global sugar prices to nearly three times their previous levels.
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