Global sugar prices have witnessed a remarkable surge in the past few weeks owing to concerns over shortages in supply, with sugar prices trading at a four and a half-month high in New York and a 12-year high in London. Last week, the world's largest sugar trader, Alvean, said it is expecting a sixth straight year of deficits in the next sugar season.

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Here are some of the factors that are adding to shortage concerns:

India, which is the world's second-largest sugar producer, may consider restricting sugar exports in order to curb domestic prices amid a 'below normal monsoon' year.

The government has directed sugar mills and traders to furnish details of sales between May and August due to which domestic sugar stocks are also trading lower.

Another reason could be a likely lower output in Thailand, as the country's millers estimate production to fall by 18 percent on a yearly basis to 9 metric tonnes.

Jose Orive, Executive Director at the International Sugar Organization (ISO), weighed in on the situation, stating, "ISO right now is expecting a much-reduced surplus for 22-23 and a deficit for 23-24 that, of course, bodes well for prices."

Orive pointed out that the ISO predicts a surplus of 0.493 million tonnes for the 22-23 season, down from previous estimates, and anticipates a deficit of 2.118 million tonnes for the 23-24 season. Thailand's production decline plays a significant role in these revised forecasts.

Orive also mentioned Brazil's role in the global sugar market, noting that while Brazil had an abundance of cane for exports in the current year due to a late harvest, this situation is unlikely to repeat in 23-24. He expressed concern for Thailand's struggles with drought, which have coincided with their efforts to increase production capacity.

“Brazil, they had an extra amount of cane for exports this year because of their late harvest. That's not going to happen in 23-24 and I think you pointed out the situation in Thailand, our heart goes out to our Thai friends, they are having a tough time with the drought precisely at a juncture where they were incrementing production capacity in areas in the northeast, we pray that the weather will stabilize and they will be come back to business as normal,” Orive said.

Aditya Jhunjhunwala, President of the Indian Sugar Mills Association (ISMA), emphasised the need for patience and cautious decision-making regarding export numbers. He stated, "It is too early to decide on the export numbers. We are still awaiting the rains to happen."

Jhunjhunwala expressed optimism about improved weather conditions in September and a potentially better outlook for October rains. He suggested that a comprehensive assessment of crop availability would be necessary in October before making any determinations regarding export quantities.

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(Edited by : Keshav Singh Chundawat)