Sugar Price: India’s sugar production is projected to fall short of local consumption for the second year in a row. Due to poor sugarcane harvests, sugar mills are shutting down earlier than normal, which may create supply constraints in the market and result in price increases.
Industry experts estimate that total production for this season will be approximately 28 million metric tons, which is considerably lower than earlier forecasts. At the start of the season, ISMA and NFCSF had predicted production to be around 31 million tons, while domestic demand was estimated at about 29 million tons.
The primary cause of low production
Heavy rainfall has adversely affected sugarcane production this year. As per NFCSF data, 467 out of the 541 mills that commenced operations this year had ceased by the end of March, compared to 420 by the same time last year. This indicates that the number of mills that have closed this year is significantly higher than the previous year.
Recent production statistics
In the first half of the 2025-26 marketing year, India produced 27.1 million tonnes of sugar, marking a 9% increase from the previous year, but this is still deemed insufficient for the entire season. Mills, particularly in key producing states like Maharashtra and Karnataka, have shut down prematurely.
The effect of rising exports
In February, the government increased the sugar export quota to 2 million tonnes, adding 500, 000 tonnes to the previous limit of 1.5 million tonnes. However, the decline in production has now strained domestic stocks. This season started with an opening stock of around 5 million tons, but the next season may begin with less than 4 million tons. As a result, sugar prices are anticipated to rise in the domestic market in the upcoming months.
In February, India increased the sugar export quota to 2 million tonnes, adding 500, 000 tonnes to the already approved 1.5 million tonnes. Following a decline in production last year, the industry was hoping to increase stocks and export surplus this season, but lower production means initial stocks for the next season will also be low. An official familiar with the matter said that this season began with an initial stock of 5 million tonnes, but the next season will begin with less than 4 million tonnes. This could certainly lead to a rise in sugar prices.
