Wilmar, a trader, claims that ethanol production will prevent Indian sugar from being exported.

Wilmar, a Singapore-based commodities broker, said that the increase in ethanol produced in India will result in lower local sugar availability. This will prevent the country exporting sugar during the 2024/25 period.

India, the second largest sugar producer in the world after Brazil has not been able to export its sugar to ensure local supply as a larger share of its sucrose production is diverted to produce alcohol instead.

Wilmar estimated on Monday that India will divert 5 million metric tonnes of sucrose to ethanol production during the 2024/25 year as it targets higher blend rates of ethanol in gasoline to reduce oil imports.

The Asian trader estimated that India's net sugar production would only reach 27.5 million tonnes, with a country-wide consumption of 29.5 million tons. Wilmar predicted that stocks would fall from 2 million to 3.3 millions tons by the end of season.

The trader stated in a report that "the sugar diversion to alcohol will lead India into a tight supply and demand (S&D) of sugar this season."

In this context, India's sugar exports in 2024/25 seem unrealistic. There is more of a risk that the Indian season will be tightened by the end (end of October 2025) with lower stock levels.

Brazil will have a long period between crops due to this year's drought, which will delay the development of crops for 2025. Other smaller producers will be forced to meet the export demand without Indian exports in the first quarter 2025. (Reporting and editing by Emelia Sithole Matarise; Reporting by Marcelo Téixeira)

(source: Reuters)