India to allow more sugar exports to avoid contract defaults

India, the world’s second-biggest sugar producer, will permit millers to export an additional 1.2 million tons in the year ending in September, Food Secretary Sudhanshu Pandey said on Friday.

That’s on top of the current export quota of 10 million tons, which the government set in May to curb overseas sales and protect food supplies. With inventories now appearing enough to satisfy local consumption, growers had asked for the limit to be raised to prevent defaults on committed contracts.

Sugar shipments are expected to reach 11.2 million tons in 2021-22, Pandey told reporters in New Delhi, adding that an official notification is expected later Friday. Additional exports from India may exert further pressure on global prices, which have sunk about 13% from this year’s peak in early April.

Preliminary reports indicate the sugar-cane area in top growers Uttar Pradesh and Maharashtra is higher for the crop to be harvested in the season starting in October, suggesting supplies are adequate going into next year, according to Aditya Jhunjhunwala, president of the Indian Sugar Mills Association.

Even after exporting about an additional 1 million tons, the country will have more than 6 million tons in closing stockpiles on Sept. 30, enough to meet local demand before cane crushing starts, Jhunjhunwala said last month.

India was the top sugar exporter after Brazil last year and counts Indonesia, Bangladesh, Malaysia and Dubai among its customers. India rarely shipped more than 7 million tons until last year, when exports hit a record 7.2 million.