India to extend sugar export ban to boost local supplies, ethanol output, sources say

E I D-Parry (India)

06/09/2024 09:32

By Rajendra Jadhav and Mayank Bhardwaj
       MUMBAI, Sept 6 (Reuters) - India plans to extend a ban
on sugar exports for the second straight year as the world's
biggest consumer of the sweetener grapples with the prospects of
lower cane output, government sources said.
    New Delhi also plans to raise the price at which oil
companies buy ethanol from sugar mills as part of efforts to
boost supplies of the biofuel, said the sources with direct
knowledge of the matter. They did not wish to be identified as
deliberations were not public.
    India's absence from the world market would further squeeze
global supplies, propping up benchmark prices in New York  SBc1 
and London  LSUc1 .
    New Delhi plans to prohibit mills from exporting sugar when
supplies from Brazil, the world's top producer and supplier of
the sweetener, are expected to drop because of a drought in the
South American nation.
    "In the current crop scenario, there is no space for sugar
exports," said one of the government sources.
    "After fulfilling the local sugar demand, our next priority
is ethanol blending, and we need much more cane to meet the
ethanol blending targets."
    Seeking to curb carbon emissions, India aims to increase the
share of ethanol in gasoline to 20% by 2025-26, from 13%-14%
now.
    Indian sugar mills such as E.I.D.-Parry  EIDP.NS , Balrampur
Chini Mills  BACH.NS , Shree Renuka  SRES.NS , Bajaj Hindusthan
 BJHN.NS , and Dwarikesh Sugar  DWAR.NS  have increased their
ethanol production capacity in the last few years.
    The government is also considering an increase in ethanol
procurement price by more than 5% for the new marketing season
beginning November, sources said.
    Late last month, a government order said India would allow
sugar mills to use cane juice or syrup to produce ethanol
starting in November.
    India's plans to extend a ban on sugar exports and raise
domestic ethanol prices have not been previously reported. Both
measures are likely to be announced later this month.
    A government spokesman did not immediately respond to a
request from Reuters for comment.
    India, also the world's biggest sugar producer after Brazil,
banned mills from exporting the sweetener during the current
season that began on Oct. 1, 2023. That was the first sugar
export curb time in seven years. 
    New Delhi allowed mills to export only 6.1 million metric
tons of sugar during the last season, nearly half of the
country's total shipment in 2021-22.   
    
    Sugar output during the next 2024-25 season is likely to
fall to 32 million metric tons from this year's 34 million tons
due to the adverse impact of last year's patchy rains in
Maharashtra and Karnataka states, the sources said.
    "The world will need shipments from India in 2025, as
Brazil's production is expected to be lower. Without Indian
exports, global prices will rise further," said a Mumbai-based
dealer with a global trade house.    

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 (Reporting by Rajendra Jadhav and Mayank Bhardwaj; editing by
David Evans)
 ((rajendra.jadhav@thomsonreuters.com; +91-22-68414378 ; https://x.com/Rajendra1857))