India, once the world's second-largest sugar exporter, is expected to have little surplus for export for at least three more seasons as El Nino weather conditions threaten cane production and rising ethanol demand squeezes supply, according to Reuters. The twin pressures are poised to keep millions of tons of sugar off the world market, tightening supplies for importers across Asia, Africa and West Asia and supporting benchmark prices in London and New York.
Export Ban and Policy Outlook
India exported 6.8 million metric tons of sugar annually on average in the five seasons through 2022-23 – about 10% of global shipments. This year, after exporting around 800,000 tons, India banned shipments until September 30, the end of the season. Mills need government approval to export sugar, and New Delhi is likely to withhold export permissions each season rather than announce a multiyear ban, government and industry sources with knowledge of the matter said.
Last month, a top minister in Prime Minister Narendra Modi's government told mills to prioritise domestic availability and not lobby for exports, the sources said on condition of anonymity. India's Department of Food, Civil Supplies and Consumer Affairs did not respond to a request for comment on the prospects for exports or its restrictions on exports.
El Nino Clouds Cane Outlook
El Nino conditions are forecast to weaken India's monsoon rains this year to their lowest in 11 years. Below-average rains, coupled with June precipitation running more than 40% below average, have prompted farmers to delay planting. "I had planned to plant long-duration cane varieties in June, but since everyone is talking about lower rains, I decided to put that plan on hold," said Sambhaji Patil, who decided to grow soybeans instead on 2 acres (0.8 hectares) in Sangli district of the western state of Maharashtra.
Nursery owner Suraj Chavan said demand for cane seedlings had fallen sharply in recent weeks. Farmers are likely to switch to less water-intensive crops, which could drag down cane acreage and availability in the 2027-28 season, said Prakash Naiknavare, managing director of the National Federation of Cooperative Sugar Factories. Local authorities have started promoting alternative crops such as soybeans, pigeon peas and other pulse varieties in most sugar-growing regions and have restricted water supplies for irrigation.
Production and Inventory Data
India was expected to produce 30.95 million tons of sugar this season, but output is now forecast at 27.9 million tons, below annual consumption of about 28.5 million tons, according to industry estimates. As a result, inventories with mills at the start of the season on October 1 are likely to fall to about 3.5 million tons, the lowest in more than three decades, sa
| Metric | Previous Season | Current Season (Forecast) |
|---|---|---|
| Annual exports (avg 5 seasons through 2022-23) | 6.8 million tons | ~800,000 tons (banned) |
| Sugar production | 30.95 million tons (expected) | 27.9 million tons |
| Domestic consumption | ~28.5 million tons | ~28.5 million tons |
| Opening inventories (Oct 1) | ~4.5 million tons (est.) | 3.5 million tons (lowest in 30+ years) |
Global Supply Implications
A prolonged absence by India from export markets would remove a key balancing supplier as weather risks and biofuel policies reshape global sugar trade flows. Top exporter Brazil is also diverting more cane for ethanol. Thailand, another major exporter, could also have its output hit by El Nino-curtailed rains. "Supplies are already tight in India, and now El Nino is emerging as a major risk," said Rahil Shaikh, managing director of MEIR Commodities India, a Mumbai-based trader. "If rains disappoint as forecast, cane planting will suffer and this will keep India out of the sugar export market for at least three years, while Brazil and Thailand could also see their crops affected by El Nino."
Interviews with over a dozen trade and industry executives, government sources and farmers show that lower cane availability and rising ethanol demand will leave little for exports for several years, prompting dealers at global houses to warn head offices of shrinking opportunities in India, trade sources said.
Impact on Traders and Importers
For commodity traders, procurement teams and analysts, India's extended absence from export markets means a structural shift in global sugar flows. Importers in Asia, Africa and West Asia that relied on Indian supplies will need to compete for Brazilian and Thai cargoes, potentially supporting benchmark prices on the ICE and London exchanges. The tighter inventories in India also amplify the price sensitivity to any further weather shocks in Brazil or Thailand. Key upcoming data releases include weekly monsoon rainfall updates from the India Meteorological Department and monthly ethanol allocation figures from the Indian government.
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