India may stay out of sugar exports for years as El Nino and ethanol absorb supply
Reuters reports that India may have little sugar surplus for export for at least three seasons as El Nino threatens cane output and rising ethanol demand diverts more supply.
India, once the world’s second-largest sugar exporter, may have little surplus left for overseas sales for at least the next three seasons. That is the central message of a Reuters report carried by The Economic Times, which says the combination of El Nino weather risk and rising ethanol demand is tightening sugar availability and could reshape global trade flows.
According to the report, a prolonged absence by India from export markets would remove a major balancing supplier for importers across Asia, Africa and the Middle East. Trade and industry sources told Reuters that lower cane availability together with expanding ethanol use will leave little room for exports for several years. For the world market, that implies tighter supply and firmer benchmark prices in London and New York.
Sources cited in the article say New Delhi is likely to keep restricting exports season by season rather than announcing a formal multiyear ban. After exporting about 800,000 tons this season, India has already barred shipments until September 30, the end of the current season. Reuters adds that India exported an average of 6.8 million metric tons of sugar a year in the five seasons through 2022-23, equal to roughly 10% of global shipments.
The weather side of the story is tied to a weaker monsoon outlook. Reuters says El Nino conditions could reduce India’s rains to the lowest level in 11 years, while June precipitation is already running more than 40% below average. Some farmers are delaying planting of long-duration cane varieties or switching to less water-intensive crops. The article gives the example of a farmer in Sangli district, Maharashtra, who decided to grow soybeans instead of cane on 2 acres.
At the same time, fuel policy is pulling more feedstock toward ethanol. Industry estimates cited by Reuters suggest ethanol demand could more than double by 2039-40, rising from about 12-13 billion litres now to around 30 billion litres. India is already encouraging higher ethanol blending and wider use of flex-fuel vehicles. Against that backdrop, industry participants warn that a severe El Nino could do more than erase exportable surplus. It could eventually force India back into sugar imports, something the country last did in 2016-17 and 2017-18 after an earlier El Nino-linked drought hit cane planting.