According to industry data, ex-mill sugar prices in Uttar Pradesh increased to Rs 4,400-4,500 per quintal, up about Rs 300 in a month. In Delhi, wholesale prices have risen to Rs 4,750-4,800 per quintal. Traders expect ex-mill prices to hit Rs 5,000-5,100 per quintal by October, when the new season starts. A weak monsoon, hurting cane output, could tighten supplies further and push prices up more, they say.
However, there is no immediate cause for alarm, according to Atul Chaturvedi, Director, Shree Renuka Sugars, even though sugar prices are likely to remain elevated in the near term. “India is unlikely to face any immediate shortage, as domestic stocks are expected to be sufficient to meet demand until the next crushing season begins,” he says.
“What we are discussing is the current crushing season. The production this year has not been all that great. Our back-of-the-envelope calculation suggests that production this year will not be more than 28 million tonnes. Production is already over. In addition, 2.8-2.9 million tonnes have been diverted towards ethanol. Overall, although production is marginally higher than last year, we have also seen around 800,000 tonnes of sugar being exported this year,” says Chaturvedi.
“So, if what we have produced is equivalent to consumption, an additional 800,000 tonnes of sugar have physically gone out of the country. That means the closing stock situation as of September 1 or October 1 could be anywhere between 3.5 million tonnes and 3.75 million tonnes, compared with nearly 5 million tonnes when we started the year. The stock levels will be relatively lower, but that is no cause for alarm. The simple reason is that our monthly consumption, even including the festival months, exceeds 2.5 million tonnes on the outer side. I think October should be safe enough. As far as November is concerned, the plants will start running at full capacity after Diwali, so there will be no issue. I believe sugar prices could possibly remain relatively high,” he adds.
Possibility of stock limits
On the possibility of imposing stock limits on the sugar industry, two Delhi-based agri-commodity experts say that traders are unlikely to hold large stocks. They add that the traders would be aware that the government could clamp down on them by imposing stock controls.
“Stock limits could provide a temporary reprieve in terms of prices, but they can definitely disturb the supply chain in the short run. So, I am not too sure whether that is a solution. However, it looks as if the government is going to be looking at the stock limits very seriously,” says Chaturvedi.As per a joint statement by the Indian Sugar & Bio-energy Manufacturers Association (ISMA) and the National Federation of Cooperative Sugar Factories (NFCSF) last week, India has adequate sugar stocks to meet the domestic demand.
The two industry bodies issued the statement after meeting with the government, urging market participants to avoid panic buying or speculative trading. “During consultation with the Government of India, the sugar industry agreed to commence the 2026-27 sugar season at the earliest possible time, based on prevailing agro-climatic conditions. This proactive decision reflects the industry’s commitment to ensuring orderly market supplies and maintaining adequate sugar availability across the country. An early start to crushing will bring fresh sugar into the market sooner, further strengthening domestic supplies, enhancing market confidence, and dispelling any unwarranted concerns regarding sugar availability,” reads the joint statement.
According to ISMA and NFCSF, the recent increase in sugar prices is not supported by demand-supply fundamentals. They say creating a false perception of scarcity despite ample stocks could fuel unnecessary market volatility, disrupt normal trade, and adversely affect consumers as well as downstream industries.
“Laying all the blame on the trade is also not fair because it doesn’t make sense. Ultimately, the ex-factory price is decided not by the trade but by the factories. If ex-factory prices are going up, and with El Niño on the horizon and rains not being all that good, there are obviously question marks over next year’s crop and yields. There is also no distinct vertical commodity exchange to give you an idea of how the markets are going to behave in the future. I don’t think the trade would actually be carrying too much sugar because they are as smart as anyone else, and they would not want to fight against the government. Whether we like it or not, sugar is a very highly regulated industry,” says Chauturvedi.
Policy uncertainty
Experts and industry stakeholders say the government’s frequent policy shifts on sugar exports, including changes in export restrictions and permissions, create uncertainty for the industry and make it difficult for mills to plan production and exports.
“If you open exports one month and then stop exports one or two months later, something is missing. To be fair to the government, they went along with the industry bodies, which were saying that the crop would be very large and that exports would have to be opened. I think the decision was a little premature and based on insufficient data,” says Chaturvedi.
“As the season progressed, it became clear that whatever the sugar associations or trade bodies were saying was way off the mark compared with the actual ground reality. I would give credit to the government for waking up at the right time and closing the export window. Otherwise, prices could have gone through the roof even further,” says Chaturvedi.
Ethanol blending programme
Chaturvedi says it’s too early to predict the final crop size, given the uncertain outlook. With rains truncated and erratic, yields could suffer, he adds.
Chaturvedi says sugarcane area may rise, but yields could still fall, and if that happens, ethanol from cane juice could take a hit.
According to him, the government may delay announcing sugar-for-ethanol diversion quotas at the beginning of the season. With sugar prices staying high, mills will likely prefer sugar over ethanol unless ethanol prices are raised closer to maize-based ethanol rates, he says.
In April, ISMA revised down its estimate of India’s gross sugar production for the season ending September 30 to 32 million tonnes from its earlier forecast of 32.4 million tonnes.
Meanwhile, India’s sugar output for the 2026-27 season, beginning in October, is projected to rise 12% to nearly 33.6 million tonnes from an estimated 30 million tonnes this season, according to the USDA’s local office. For 2025-26, sugarcane production is estimated at 455 million tonnes, down from the earlier projection of 465 MT, as excessive rainfall in Maharashtra and Karnataka during August and September 2025 disrupted crop development and weighed on yields.