We regard India’s measure of limiting its sugar exports to 10m tonnes effective from Jun 1 through Oct 31, 2022 as a slight positive for the global sugar price because it puts a brake on the market expectations for exports of above 10m tonnes. This is despite the fact that the 10m-tonne cap on Indian exports is deemed quite a lot. We upped the global sugar price range slightly to 18.5-20.5 cents/lb (from 18-20 cents/lb) in anticipation of lower-than-expected Brazilian sugar output related to the shift to ethanol production led by higher oil price. As the sugar fundamentals have so far remained solid, we reiterate our TRADING BUY on KSL.
India to place a cap on sugar exports at 10m tonnes
India decided to limit its exports of sugar (raw, refined and white sugar) to 10m tonnes effective from Jun 1 through the end of season on Oct 31, 2022, to maintain domestic supply availability and sugar price stability in India during 2021/22 season. Once the shipments hit 9m tonnes, exporters must apply for permits to export the remaining 1m tonnes. It is the first time in six years that India has restricted sugar exports to safeguard its own food supplies as a form of “food protectionism”. However, these restrictions will not be applied to sugar being exported to the EU and the US. Earlier, it halted wheat exports in mid-May 2022 after the domestic wheat prices hit a record high.