Sugar hit its lowest price in more than three years on Monday following news that India will allow 1 million metric tonnes of sugar exports in the current season that runs through to the end of September.
India is the world’s second-largest sugar producer.
Reuters reported on Sunday that New Delhi hoped to support sugar mills by allowing exports.
In addition to this, the move aimed to prop up local prices of the sweetener, which had come under pressure in recent months.
Although there had been speculation for weeks that exports would be allowed, the decision surprised some traders as this season’s production is expected to fall below consumption for the first time in eight years.
ING’s head of commodities strategy Warren Patterson said, “The news is likely to keep pressure on global prices.”
Falling
White sugar futures on the ICE exchange LSUc1 – used as a global benchmark for the sweetener – hit $470.20 a tonne earlier, their lowest since September 2021.
They later traded down 1% at $473.60 a tonne, bringing losses for the year to more than 5%.
Raw sugar futures SBC1 did not trade due to a US holiday, but closed down 1%at 18.22 cents per pound on Friday.
India’s production could fall to around 27 million tonnes from 32 million tonnes last year and below annual consumption of more than 29 million tonnes, according to leading trade houses in the country.
New Delhi did not allow exports in the previous season.
A Europe-based sugar industry expert told Reuters that while he also expected India to produce around 27 million tonnes this season, one leading trade house had been promoting the view that output would be significantly higher.
Meanwhile, India’s sugar mills expect next season’s production to recover.
Sugar prices have also come under pressure this year based on concerns that Thailand may have more of the sweetener to sell because of a halt to syrup exports to China.
Chinese authorities have asked Thailand to inspect dozens of factories before opening negotiations to life a ban imposed last month on sugar syrup and premixed powder exports from the Southeast Asia nation.
In other soft commodities traded, London cocoa fell 0.6% while robusta coffee rose 1%.
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