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Market Chatter: India Weighs Curbs on Sugarcane Use for Ethanol to Rein In Sugar Prices

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India is reportedly considering curbs on the use of sugarcane for ethanol production in its bid to boost sugar output and calm soaring prices, according to a Reuters report, citing two government officials and two industry sources.

The curbs are being considered for the Indian festival season beginning in October, amid reduced rainfall in Maharashtra and Karnataka, the country's two biggest sugarcane-producing states.

The move could help the country avoid sugar imports by boosting domestic supplies, with the decision expected to be made by the end of next month.

This comes after sugar mills across the country diverted 3 million metric tons of sugar, or 10% of the total output, towards ethanol production, since the beginning of this year through the end of September. This led to a 10% surge in sugar prices in the country, to a record high, over the past month alone.

The surge in ethanol demand was driven by the government's program to blend 20% of it into petroleum products. The government could now turn to corn and rice, which are in ample supply, while reducing the amount of sugarcane.

The Indian Government's Directorate of Sugar and Vegetable Oils did not immediately respond to' request for a comment on this story.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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