Due to the El Niño phenomenon, the price of sugar in the world may rise sharply.
Due to the climate phenomenon, rainfall is expected to decrease in India, the second largest sugar exporter. As a result, sugarcane planting may be delayed.
India, the world's second-largest sugar exporter, may not have surplus sugar reserves for export for at least another three seasons. This is due to the El Niño weather phenomenon causing a decline in sugarcane yields and an increase in demand for ethanol.
According to Reuters, these factors could prevent millions of tons of sugar from reaching the global market, reducing supply for importing countries in Asia, Africa, and the Middle East, and keeping benchmark prices in London and New York at elevated levels.
Based on interviews with trade and industry representatives, government sources, and farmers, the decline in sugarcane volume and rising demand for ethanol production will leave insufficient quantities for export in the coming years.
In India, sugar exports are carried out with government permission. Informed sources in the government and industry have indicated that New Delhi may restrict export permits each season rather than imposing a multi-year ban.
Experts note that due to El Niño, monsoon rains in India are expected to be at their lowest level in 11 years this year.
The decrease in rainfall is forcing farmers to delay planting sugarcane, and some are planning to switch to crops that require less water.
According to industry estimates, sugar production in India this season could fall from the previously expected 30.95 million tons to 27.9 million tons. This is even lower than the country's annual domestic consumption of approximately 28.5 million tons.
At the same time, India continues its policy of increasing the share of ethanol in gasoline to reduce dependence on imported oil. Industry representatives believe that the government's future policy will prioritize supporting ethanol production over sugar exports.
Government sources and industry representatives say that if El Niño severely impacts sugarcane cultivation, India may also be forced to import sugar in the future.
The country last imported sugar in the 2016–2017 and 2017–2018 seasons.
