Brazil is the biggest exporter of sugar, constituting 35-45 per cent of the worldwide commerce, and a fall in its exports within the present season may lead to India‘s share rising to round 15 per cent, the Ind-Ra report said.
Nevertheless, Ind-Ra believed exports had been anyway unlikely to exceed 10 million tonnes, given the rebound in manufacturing in Thailand after two consecutive seasons of decline.
In consequence, the restriction is unlikely to materially have an effect on the sector, though any points within the mill-wise approval course of may act as a dampener, it added.
In the meantime, with two successive seasons of manufacturing deficit, worldwide sugar costs hit a five-year excessive of over 20 cents per pound in April 2022, averaging round 19 cents per pound until now in SS22.
Whereas India’s export restriction has not affected costs meaningfully, costs are prone to stay strong with a decrease cane output and sugar combine in Brazil, which bodes nicely for Indian exports, Ind-Ra mentioned.
It mentioned that regardless of producing a high-quality sugar, the competitiveness of Indian exports is affected by the nation’s excessive cane prices relative to different main producers, together with Brazil, Thailand and Australia, rendering exports unviable with out subsidy till a few yr again.
After hitting a historic excessive of 14.6 million tonnes on the finish of SS19, sugar shares have been moderating, it added.
Regardless of a rise within the manufacturing, larger exports and diversion in the direction of ethanol are prone to cut back the sugar inventory additional to round 7 million tonnes at end-SS22, though nonetheless larger than the normative carry ahead requirement of round 5.5 million tonnes.
India’s gross sugar manufacturing (earlier than ethanol diversion) elevated to 38.3 million tonnes in SS22 (as much as mid-Could), up 5.8 million tonnes primarily attributable to a rise within the manufacturing in Maharashtra and Karnataka, it mentioned.
Nevertheless, with a probable improve in sugar diversion in the direction of ethanol to three.4 million tonnes (SS21: 2 million tonnes), the web sugar manufacturing is prone to are available at 35.5 million tonnes whereas consumption may proceed to develop at round 2 per cent, rising to 27.2 million tonnes in SS22.
Due to this fact, whereas consumption is prone to develop at a modest charge of 1-2 per cent, the rise in cane diversion in the direction of ethanol progress would lead to an exportable surplus of 6-8 million tonnes in SS23 (relying on cane output), therefore sustaining a wholesome home steadiness, it added.