Why the sweetness of sugar became bitter, what weather is responsible for the rising price? Reason behind sugar price hike in India
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Why the price of sugar is increasing
The report said that there has been a significant decline in the futures prices of both wheat and maize. A record harvest of massive Brazilian corn, along with the largest annual increase in U.S. grain acreage in seven years, and the continuation of significant wheat export flows from the Black Sea kept prices lower and the S&P GSCI Agriculture index down on a month-to-month basis. Two percent softening has been registered.
Unlike wheat and maize, weather risks remain high for sugar, cocoa, robusta coffee and Australian wheat, the report said, as the effects of El Niño become more pronounced. India in particular is getting a lot drier, which is driving up the price of sugar. According to the report, in the case of sugar, the impact could be more immediate. El Nino could make Thailand, India and Australia drier than normal. These are the three largest exporters after Brazil. The report said that prices have increased by 40 per cent so far this year due to the impact of El Nino.
India and Thailand are already dry, and production estimates have been revised downwards. Shortage of water in reservoirs in Maharashtra, India’s major sugar producing region, is expected to affect the crop in the 2024-25 season. Like China, the coffee market could be deeply affected, as Vietnam is the largest Robusta producer in the world and Indonesia is third. Most coffee farms in Vietnam are irrigated, but Indonesian farms are not. Clearly, the El Niño effect also had a bearing on the rally seen in Robusta prices at the beginning of the year. In the case of cocoa, there is little correlation between dryness in West Africa (the region responsible for 70 percent of global cocoa exports) and El Niño. Certainly, this was the case in the 2015-16 season, when a strong El Niño weakened West African production.
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