Exclusive: India Set to Ban Sugar Exports for First Time in 7 Years

by Rajendra Jadhav and Mayank Bhardwaj (Reuters) India is expected to ban mills from exporting sugar in the next season beginning October, halting shipments for the first time in seven years, as a lack of rain has cut cane yields, three government sources said.

India's absence from the world market would be likely to increase benchmark prices in New York and London that are already trading around multi-year highs, triggering fears of further inflation on global food markets.

"Our primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane," said a government source who asked not to be named in line with official rules. "For the upcoming season, we will not have enough sugar to allocate for export quotas."

India surprised buyers last month by imposing a ban on non-basmati white rice exports. New Delhi also imposed a 40% duty last week on exports of onions as it tries to calm food prices ahead of state elections later this year.

A Mumbai-based dealer with a global trade house said lower output in Thailand was also expected to reduce shipments and major producer Brazil would alone not be able to fill the gap. READ MORE

Excerpt from The Hindu Business Line: Curbs on molasses export may help increase domestic supply of ethanol, say experts -- After the Centre approved a hike in ethanol prices that could result in ₹100 crore additional expenditure by oil marketing companies (OMCs) and increase the open market demand for rice and maize, experts in the sugar industry have sought a curb on molasses export. Molasses could have been converted to ethanol domestically.

According to industry sources, grain-based distilleries have contracted to supply 21.25 crore litres of ethanol to be made out of damaged/broken rice and 0.08 crore litres to be made from maize in the current ethanol supply year ending October 31. However, the distilleries have supplied only 9.52 crore litres of ethanol made from damaged rice and no supply made from maize until July 31. Supplies of both these grains are stretched.

“Had there been restriction on molasses export, India could have produced 6.7 crore litres from the volume exported during April-June. The maximum quantity exported during crushing season and a decision restricting export should be taken before November as there has also been concern on sugarcane output due to prolonged dry weather in June-July in Maharashtra and Karnataka,” said a sugar industry official.

Countries such as the Netherlands, Philippines, Vietnam, South Korea and Italy are the top five destinations of Indian molasses which are used for cattle feed manufacturing, an expert said.

Fearing of missing the 12 per cent blending target, distilleries have got second hike in rates of ethanol purchased by oil marketing companies (OMCs) in a span of 15 days. With effect from August 22, ethanol prices stand at ₹64/litre (from damaged rice) and ₹66.07/litre (from maize), up by 15-17 per cent from the rates fixed for the season. READ MORE