Source: nhandan.vn
India still prioritizes sugar production in the 2023/24 crop year
In just 3 weeks, the Indian Government has changed its sugar production policy for the 2023/24 crop year twice. That doesn’t just impact sugar cane industry of this South Asian country, but also contributes to creating a new context for the world sugar market in 2024.
Specifically, in early December 2023, India suddenly required domestic factories to reserve 100% of crushed sugarcane for sugar production, instead of separating about 25-30% for ethanol extraction.
However, just over a week later, the country once again changed its policy on using raw materials for sugar production in the 2023/24 crop year due to concerns about negative impacts on the national biofuel program. According to the latest announcement, factories in India are still allowed to produce ethanol from pressed sugarcane and type B heavy molasses. These are the two main production raw materials, accounting for about 80% of this country’s ethanol, but limited to the equivalent of 1.7 million tons of sugar.
Thus, through two policy adjustments, India’s general goal is still to prioritize sugarcane raw materials for sugar production in the 2023/24 crop year. The government of this country said the new policy aims to stabilize the domestic sugar supply and cut the “fever”. sugar price is at a historic peak.
Previously, world sugar prices reached their highest in 12 years and Indian sugar prices reached their highest in nearly 14 years. Unusually hot and dry weather due to the impact of El Nino caused the Indian Sugar Mills Association to lower the country’s 2023/24 sugar production forecast to 33.7 million tons, down 8% compared to the previous season. This is the main reason affecting price movements.
‘Butterfly effect’ behind India’s policy decision
India is currently the second largest sugar producing country in the world. Therefore, the changes on sugar supply of India will greatly impact world supply. The reaction of sugar prices immediately after India changed its production policy for the first time in December reflected India’s importance on the global sugar “market map”.
According to the Vietnam Commodity Exchange (MXV), the price of sugar 11 on the New York Intercontinental Exchange lost nearly 8% in one session (December 6, 2023) as soon as the market received information about the preferential plan. India’s leading sugar producer. This is also the strongest drop in nearly two years for this item.
Before this event, experts said that India prioritized the amount of crushed sugarcane for sugar production to improve the alarming supply situation. Furthermore, the recovery in output in the world’s second largest sugar producing country will likely lead to a more positive global supply in the 2023/24 crop year.
Mr. Duong Duc Quang, Deputy General Director of MXV, said that the sugar market in 2024 will still pay a lot of attention to India’s policy changes. Because this change may help sugar supply recover more positively than previous forecasts. The sugar supply-demand balance can gradually shift from a deficit to a balance, or even a surplus, if the supply in Brazil is stable and other supply-demand factors remain unchanged. Accordingly, world sugar prices will no longer be anchored at high levels, especially at a 12-year peak.
 |
Restoring sugarcane raw material areas in a new context
By 2024, the sugar market will be in a new context when sugar prices are expected to be unlikely to reach a peak like in 2023. This may also cause the loss of an important driving force for Vietnam’s plan to restore sugarcane raw material areas. Male.
In recent years, developing raw material areas has not only been a wish of manufacturing factories but also a solution to revive sugar industry in the context of facing the risk of production contraction due to decline in sugarcane area and output.
To encourage farmers to expand sugarcane growing areas, from central agencies to factories, they have actively implemented many solutions such as: strengthening links with cooperatives and individuals, implementing trade defense measures, banning smuggled sugar… especially increasing the price of purchasing sugarcane raw materials from farmers.
According to the Vietnam Sugarcane Association (VSSA), the high purchase price of sugarcane raw materials is the main driving force behind the significant increase in area and output in the two crop years 2021/22 and 2022/23. Currently, the purchasing price of sugarcane has reached 1.1-1.3 million VND/ton. This is a similar price compared to other sugarcane producing countries in the region.
 |
However, in 2024, if the price of finished sugar products decreases, sugar production enterprises will not be able to purchase sugarcane raw materials at the high level as in 2023. This is an issue that requires the Vietnamese sugar industry to make calculations. and new directions for long-term recovery and development.
Commenting on this issue, Mr. Duong Duc Quang said: “Increasing sugarcane purchasing prices from farmers is an effective solution to expand raw material areas in 2023 and create a premise for 2024. However, The market context next year is expected to be volatile, requiring the sugar industry to soon find a path to closer links and more sustainable development.”
