Bloomberg - The Indian government’s plan to restrict sugar exports puts a cap on the global supply of the crop from the sub-continent, while attention will turn to Brazilian crop data due later this week. India, the second-largest exporter of sugar in the world after Brazil, is set to restrict sugar exports above 10 million tons as a precautionary measure to protect its own food supplies, Bloomberg reported, citing a person familiar with the matter. Once shipments hit 9 million tons, exporters will have to apply for permits to send the remaining 1 million tons. White sugar for August delivery rose as much as 1.4% to $559.80 a ton in London. “The headline is positive for sugar prices but it doesn’t change the supply picture much as the market is expecting between 9-10 million,” said Ben Seed, an analyst at Czapp. Focus now returns to Brazil, said Michael McDougall, managing director at Paragon Global Markets LLC UNICA is expected to release its latest figures this week. There is concern on agricultural yields in Brazil, Seed said. “There is probably more downside to the crop there than upside. You also have the dynamics with the energy market with the ethanol parity,” in the country where the head of the state-run Petrobras was fired yesterday. Higher fuel prices mean more sugarcane goes to produce ethanol. White sugar is also feeling the pressure from lower capacity at refineries and “several players in the Middle East not being able to supply the market with as much sugar as they normally would,” Seed said. In other softs, coffee, cotton and cocoa slid in New York.

India’s expected announcement on sugar export restrictions are considerably less restrictive than headlines suggest. The planned cap of 10 million tons is below the annual export total of any year since India started producing a surplus in 2011. According to the Indian Sugar Mills Association, total exports to the year ending Sept. 22 were projected to be 9 million tons. Sugar has been climbing this year on fears that frost in Brazil, by far the world’s largest exporter, would hurt production. There is also a risk to sugar supply from high oil prices as producers switch to ethanol production rather than sweetener. While India’s move will not be the major driver of sugar prices, it does point to the continuing trend towards agricultural resource nationalism that is a risk to global supplies of key commodities.

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