21/04/2026
Early projections for India’s 2025–26 sugar season (October 2025–September 2026) had pointed to a comfortable supply scenario. The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) had estimated gross production at around 32.4 million tonnes (LMT), with net sugar output—after ethanol diversion—at 29.3 LMT. This was expected to adequately meet domestic demand of 28.5–29 LMT, supported by opening stocks of nearly 5 LMT.
However, unseasonal rains across key cane-growing regions have sharply altered this outlook. Excess rainfall damaged crop quality and yields, forcing mills to shut operations months ahead of schedule and tightening supply dynamics.
Production Falls Short Despite Early Gains
By late March 2026, cumulative production stood at 27.12 LMT across 541 mills, reflecting a 9% year-on-year increase. Recovery rates improved to 9.56% from 9.37% last season. Yet, the pace of mill closures has accelerated significantly—467 mills had shut compared to 420 in the previous year, particularly in Maharashtra and Karnataka.
State-wise trends reflect the divergence. Maharashtra’s output estimate has been revised down to 9.97 LMT from 10.81 LMT, while Uttar Pradesh stands at 9.1 LMT versus an earlier estimate of 9.41 LMT. Karnataka remains a relative outperformer at 46.75 LMT, up from 39.90 LMT last year.
The All India Sugar Trade Association (AISTA) has accordingly cut its full-season net production estimate to 28.3 LMT, down 4.4% from 29.6 LMT, factoring in ethanol diversion of around 3.2 LMT.
Supply Tightening and Inventory Pressure
Weather disruptions have intensified competition for cane, with mills competing against khandsari units and traditional crushers. Early flowering in Maharashtra and crop damage in Uttar Pradesh further reduced cane availability, leading to early shutdowns—nine mills in Uttar Pradesh alone ceased operations by mid-February.
As a result, inventories are tightening. Opening stocks for the next season are expected to fall below 4 LMT from 5 LMT this year. With domestic consumption steady at 28.5–29 LMT, India is likely to face a supply deficit for the second consecutive year.
Prices Rise, Supporting Mill Margins
Tighter supply conditions have pushed domestic sugar prices higher, ranging between ₹37,000 and ₹40,000 per tonne in key producing states such as Maharashtra and Uttar Pradesh. This price firmness is partially offsetting pressure on mill margins caused by elevated cane procurement costs.
Lower stock levels and sustained demand are expected to keep prices supported in the near term, even as production undershoots earlier expectations.
Export Miscalculation Adds Pressure
The government’s decision to raise the export quota to 2 LMT in February—comprising an initial 1.5 LMT plus an additional 0.5 LMT—has proven mistimed. Between October and February, mills exported only 0.315 million tonnes, primarily to the UAE, as weak global prices discouraged aggressive shipments.
Industry participants now believe production is unlikely to exceed 28 LMT, prompting calls for policy recalibration. Exports contracted earlier on expectations of surplus are now adding strain to already tight domestic supplies.
Structural Concerns Persist
Despite expanded acreage of 5.735 million hectares, output has been constrained by weather disruptions and ethanol diversion of 3.1–3.4 LMT. Regional performance remains uneven, with high recovery in Kolhapur (11.01%) and Pune (9.86%), while Solapur lagged at 8.6%.
Looking ahead, risks remain elevated. El Niño conditions, financial stress on mills, and reduced ethanol blending could impact the 2026–27 season. More than half of Maharashtra’s mills may face operational challenges amid low realizations and policy uncertainties.
Outlook
The 2025–26 season underscores the fragility of India’s sugar balance. While domestic prices have strengthened, falling inventories and weak exports highlight structural vulnerabilities. As the season concludes, policy recalibration and supply-side stability will be critical to sustaining this vital agro-economy.