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India is contemplating curbing ethanol manufacturing from sugar cane because the world’s largest shopper of the sweetener battles home shortages.

Authorities are finding out a proposal to limit using sugar-cane juice to supply biofuel for the present season, in line with folks accustomed to the matter, who requested to not be recognized because the discussions are non-public. No ultimate resolution has been made, and plans may nonetheless change, the folks stated.

The potential transfer could be in keeping with authorities efforts to regulate home meals costs earlier than nationwide elections subsequent 12 months, when Prime Minister Narendra Modi seeks a 3rd time period in workplace. India has ramped up restrictions on exports of rice, and not too long ago prolonged curbs on abroad gross sales of sugar.

Shares of Indian sugar corporations slumped on Thursday. Balrampur Chini Mills Ltd. tumbled as a lot as 7.6% in Mumbai, extending a lack of greater than 7% a day earlier. Shree Renuka Sugars Ltd. was down 5.5%, whereas Bajaj Hindusthan Sugar Ltd. fell 7.4%. Those strikes adopted a plunge of just about 8% in New York sugar futures on Wednesday, essentially the most in 10 months.

Poor rainfall has harmed cane crops in India, prompting the world’s second-biggest producer to delay curbs on sugar exports past Oct. 31. Limiting ethanol output would hold sugar inventories in India from falling additional, stated Michael McDougall, managing director at Paragon Global Markets.

Sugar manufacturing dropped greater than 10% from a 12 months earlier to 4.32 million tons within the first two months of the season that began on Oct. 1, in line with the National Federation of Cooperative Sugar Factories Ltd., a millers group.

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The group stated earlier this month that, in line with authorities estimates, about 4 million tons of sugar will likely be diverted to supply ethanol in 2023-24. Therefore, web sugar manufacturing in the course of the 12 months will likely be solely 29.15 million tons, in contrast with 33.1 million tons a 12 months earlier, it stated.

While the proposed measure may assist tame meals inflation, it could have restricted influence, the folks stated. That’s as a result of some ethanol was already offered at a young earlier this 12 months and can must be produced, in line with the folks.

The Food Ministry didn’t reply to a request for remark.

–With help from Atul Prakash, Pratik Parija, Megan Durisin and Kevin Orland.

(Updates so as to add political context in third paragraph, share strikes in fourth, and Indian output estimates in sixth and seventh)

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