The Indian government announced that it will limit sugar exports to 10 million tons during the marketing season, which runs through September, in order to keep prices stable. Sellers are also required to obtain “special clearance” from authorities for any sugar shipment between June 1 and October 31.
India is the world’s largest producer of sugar and the world’s second-largest exporter, after only Brazil. The Narendra Modi government stated that action was required to maintain sugar stocks in the country following “record growth in exports” last year and this season.
The decision to restrict exports comes at a time when annual retail inflation in Asia’s third-largest economy reached 7.8% in April, the highest level in nearly eight years. It is also another indicator of escalating global food protectionism, as key producers reduce agricultural exports, adding to the supply shock caused by Russia’s invasion of Ukraine in February. Ukraine and Russia contribute roughly 30% of total wheat exports.
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Indian sugar mills have signed contracts for approximately 9 million tons of exports in the current marketing year, which spans from October 2021 to September 2022. According to government data, the country transported 7 million tons of sweetener overseas in the preceding 12-month period, the most in recent years.
On Wednesday in London, white sugar futures were trading 1% higher at $556.50 a metric ton. Since the beginning of January, they’ve gained 13% since the beginning of January and are around 26% higher than this time last year.
According to the World Bank, Russia’s invasion of Ukraine has led to a historic shock to commodities markets, which will keep world prices high until the end of 2024. Food prices are predicted to grow by 22.9% this year, owing to a 40% increase in wheat prices, according to the report.
Malaysia restricted chicken shipments to its neighbors earlier this week, stating that “the government’s priority is our own people.” And, only a few days ago, India banned wheat exports as life-threatening heat waves reduce output and drive local prices to all-time highs. Although the country is the world’s second-largest producer of wheat after China, it is not a significant exporter of the product.
On Tuesday, India’s commerce minister, Piyush Goyal, remarked at the World Economic Forum in Davos that “our export control should not disrupt global markets. We are still allowing shipments to vulnerable countries and neighbors,” he continued.
Despite these promises, India’s limits highlight the world’s food situation’s vulnerability. Global purchasers hoped that Indian wheat shipments would help cover the void left by Europe’s war, which has disrupted critical agricultural export shipments.
Last week, though, there was some encouraging news. Indonesia said that it would relax a ban on palm oil exports imposed in April. The Southeast Asian country is the world’s leading producer of the substance, which is widely used as cooking oil and in a variety of food products.
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