Export subsidy policy continued: India’s Cabinet Committee on Economic Affairs (CCEA) approved an export subsidy of Rs. 10,448 per MT (around US$6.63 cents per cwt) for 2019/20 exports. Total cost is officially estimated at Rs. 62.68 billion (more than US$875 million). Despite objections—WTO complaints—from other sugar origins, India’s government seems focused on ballooning domestic stocks, targeting exports of 6.0 MMT of sugar in 2019/20.

Notably, the lump sum subsidy would be credited directly to cane growers who are owed cane payments by the exporting mills, who would only receive the subsidy once arrears are paid. Lowering domestic stocks, plus an expected drop in sugar output due to poor weather, would presumably bolster domestic pricing next season. Forecasts currently call for either a small surplus or a small deficit for 2019/20. Some sources are calling for a production decline to as low as 28 MMT next season.

India gooses 2019/20 fuel ethanol price: On the heels of its export subsidy announcement, India’s central government announced adjustments to the ethanol pricing mechanism for mandated fuel blending. The new rules, which now allow conversion of cane and sugar syrup to ethanol in addition to expected higher pricing, will be welcomed by the sugar industry—ahead of elections in some cane-grower states.

Per government figures cited by The Hindu BusinessLine, 2018/19 ethanol production could surpass 2 billion liters, compared to 380 million liters in 2013/14. The stated goal for next year is a blend rate of 7 percent from this season’s 6.2 percent blend rate. Purchases for blending are targeted at 2.6 billion liters for next season, per The Economic Times. The goal for 2022 is a blend rate of 10 percent.

USDA India sugar production history

Source: USDA
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