Sugar heads toward two-month high on concern over Indian exports

Raw sugar futures headed for their highest closing price in two months as traders speculate that India, the second-biggest shipper of the sweetener, will curb supplies for the season that starts in October.

India has ramped up restrictions on rice exports over the past few days as the nation tackles rising food costs before an election next year, prompting speculation about which commodity might be next. Lack of rains threatens to cause a shortfall in Indian sugar production, which could lead to export restrictions.

“Indian exports for the coming season look more likely they will be canceled, at least until after the election,” said Michael McDougall, managing director at Paragon Global Markets.

The most-active raw sugar contract rose for a fourth straight day in New York, climbing as much as 2.7% to 25.49 cents per pound. That’s the highest intraday price since June 22.

Indian shipments are key to satisfying global demand after the harvest in top shipper Brazil ends later this year. A concern with a shortage of sugar in the first months of 2024 has caused a jump in the spread commanded by the March futures contract over the price for delivery in May.

In Brazil, scattered rains are seen hitting Center-South, the top growing region, for the rest of this week, according to meteorologists at Rural Clima. Above-average rains could disrupt sugar-cane harvesting and interrupt loadings at the main ports, bringing additional supply concerns.