W51 Sugar Update: Egypt Extends Sugar Export Ban Amid Global Market Dynamics While India Contemplates Similar Measures for the 2023/24 Season

Possible Sugar Exports Ban and Sugar Imports in India Amidst Decreased Output

India has been a net exporter of sugar in the past five years, with an average export volume of 6.8 million metric tons (mmt) annually, comprising 12% of the global market. However, there is a growing consensus among traders, industry officials, and farmers that the country will likely impose a sugar export ban starting Oct-24 and may need to import sugar in 2025 as farmers start cultivating alternative crops. In the 2022/23 season, India's sugar production was negatively affected by extreme weather, particularly in the western state of Maharashtra, Karnataka, and the state of Uttar Pradesh in the north, which collectively account for more than 80% of India's sugar production. These states experienced substantial declines in sugar production caused by the El Niño phenomenon.

India produced 33.1 mmt of sugar in the 2022/23 season. However, the projected production for the upcoming 2023/24 season is expected to decline to 31.7 mmt, with concerns that the production volume may not reach 30 mmt. Additionally, planned reductions in sugarcane crops due to water shortages led to further production declines to 25-26 mmt in the 2024/25 season.

Brazil's Sugar Export Dynamics in 2023

In 2023, Brazil is projected to produce 41 mmt of sugar, with 10 mmt allocated for domestic consumption and a surplus of 30 mmt for export. As the world's leading sugar exporter, Brazil witnessed notable changes in its export dynamics. Traditional importers, such as Saudi Arabia and Iraq, have increased their year-on-year (YoY) purchases by 44% and 45%, respectively, driven by a decrease in Indian supply. Despite high tariffs, the United States (US) imported 700 thousand mt of Brazilian sugar. In addition, Mexico imported Brazilian raw sugar for the first time due to a decline in sugar production caused by the El Niño phenomenon. China has consistently been the primary destination for Brazilian raw sugar since 2020, although refiners faced negative spot margins throughout the year. The Automatic Import License System (AIL) compelled refineries to purchase at a loss. India and Nigeria followed China as the second and third destinations for Brazilian sugar.

Emphasizing Brazil's leading position in global sugar supply, close attention to sugar prices and export capacity is crucial. The potential consequences of adverse weather events or shifts in export policies by other producers, notably India, underscore the necessity for vigilant monitoring to uphold the stability of the global sugar market.

Malaysia Relaxes Import Permits to Address White Sugar Supply Disruptions

The Malaysian government addresses potential disruptions in refined white sugar supplies by relaxing import permit conditions, with 43 companies granting permits to import 557 thousand mt. Despite this, only 5% of the imported sugar supply has been successfully brought into the country for personal use, prompting the government to remain open to further conditional import permit relaxations, particularly for those able to import and sell refined sugar at the price of USD 0.62 per kilogram (MYR 2.85/kg).

Egypt Extends Sugar Export Ban to Address Price Surge and Ensure Domestic Market Stability

The Egyptian government prolonged its sugar export ban until March 30, 2024, in response to soaring sugar prices, reaching USD 1.61/kg on Dec-23. This implementation aims to stabilize the domestic market and ensure consumers a consistent and affordable sugar supply, showcasing the government's commitment to addressing price hikes, protecting public interests, and maintaining economic stability.