UN Secretary-General António Guterres stated that there is a more than 90% probability that El Niño will occur in the coming months. This natural phenomenon could exacerbate the effects of global warming and disrupt food and water systems. According to the Food and Agriculture Organization of the United Nations (FAO), El Niño could negatively affect, in particular, sugarcane production in India and Thailand. At the same time, India’s main sugarcane-growing regions are already facing a shortage of rainfall, reports bb.lv.
The Role of the “Indian Factor” in the Global Sugar Market
India is among the world’s largest sugar producers and exporters—alongside Brazil. The main sugarcane-growing regions—Maharashtra, Karnataka, and Tamil Nadu—are already experiencing water shortages.
It is known that the southwest monsoon, which plays a key role in India’s agriculture, could become a risk factor for the global sugar market. According to his forecast, if Indian exports were to cease entirely, the global price of sugar could rise to $750–800 per metric ton.
White sugar futures on the London Exchange had already exceeded $660 per metric ton in early June amid expectations of a possible reduction in sugar supplies from Asia and Latin America.
India had previously announced a suspension of sugar exports until September 30. The decision is linked to the need to preserve domestic reserves and assess the prospects for the new harvest, according to the snob.ru portal.
It is projected that, due to the El Niño effect, sugar production in India could decrease by 3–8 million metric tons compared to last year. If the country completely restricts exports and Brazil is unable to quickly increase its exports due to limited processing capacity, sugar prices could rise significantly.
Earlier, the Food and Agriculture Organization of the United Nations (FAO) linked the prospect of further increases in global sugar prices to the redirection of sugarcane supplies toward the bioethanol production sector due to the energy crisis caused by the war in the Middle East.
