Ethanol production to prevent Indian sugar exports, says trader Wilmar

Wilmar International

28/10/2024 15:29

By Marcelo Teixeira
       NEW YORK, Oct 28 (Reuters) - The increase in ethanol
production in India due to higher blending rates will reduce
local sugar availability and prevent the country from exporting
sugar in the 2024/25 season, Singapore-based commodities trader
Wilmar  WLIL.SI  said.
    India is the world's second-largest sugar producer after
Brazil, but the country has been absent from export markets to
guarantee local supplies as larger shares of its sucrose output
are diverted to produce ethanol instead of sugar.
    Wilmar projected on Monday that a total of 5 million metric
tons of sucrose will be diverted to ethanol production in the
2024/25 season as India targets higher blending rates of ethanol
into gasoline to reduce its oil imports.
    As a result, the Asian trader estimates net sugar production
to reach only 27.5 million tons in India, for a total country
consumption of 29.5 million tons. The difference will come from
stocks, which Wilmar projected to fall 2 million tons to 3.3
million tons at the end of the season.
    "Sugar diversion to ethanol will lead India to a tight sugar
S&D (supply and demand) this season," the trader said in a note.
    "In this context, it seems unrealistic to see India
exporting sugar in 2024/25, rather there is a real risk of
tightness by the end of the season in India (end October 2025),
with lower stocks."
    Brazil is expected to have a long between-crops period due
to the drought this year that will delay crop development for
2025. Without Indian exports, other smaller producers will have
to meet export demand in the first quarter of 2025.

 (Reporting by Marcelo Teixeira; Editing by Emelia
Sithole-Matarise)
 ((marcelo.teixeira@tr.com; +1 332 220 8062; Reuters Messaging:
marcelo.teixeira.thomsonreuters.com@reuters.net - https://x.com/tx_marcelo))