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Informist, Monday, Aug. 25, 2025

 

By Taniva Singha Roy

 

MUMBAI - Market participants foresee a sugar supply glut in the 2025-26 season (Oct-Sept) amid higher production accompanied by falling exports and lower diversification to ethanol. They also expect the year to close with a high stock of the sweetener.

 

Poor price competitiveness of domestic sugar is an obstacle towards sugar moving out of the country. "Indian sweetener rates are selling at premium to prices at the international exchanges, which is why importers are hesitant to buy," said V.K. Jain, executive director at Deccan Sugar Mills Pvt. Ltd.

 

Indian manufacturers are demanding around INR 43,100 per tonne of sugar due to additional logistic freight-on-board expense, while sugar prices in the Intercontinental Exchange Europe are currently at $482, which is equivalent to INR 42,159.58, he said. "Global price of refined sugar is currently $470 which is INR 41,100.05 per tonnes, significantly lower than what Indian mills are quoting," Jain said.

 

However, due to forecast of a higher sugar output, around 2 million tonnes sugar is expected to be available for exports. In the ongoing sugar season, government had allocated 1 million tonnes of sugar to be exported out of which below 800,000 tonnes have been estimated to be exported, according to industry sources.

 

Sugar production in the 2025-26 season is expected to be much higher than the current season owing to good rainfall. India's gross sugar production is likely to rise 18.3% on year to 34.9 million tonnes in the upcoming 2025-26 sugar season starting October, according to the Indian Sugar Mills & Bio-Energy Manufacturers Association's first preliminary estimates. Gross sugar output is estimated before sucrose diversion for ethanol production, and last year it was 29.5 million tonnes.

 

India has received above normal monsoon so far during the ongoing southwest monsoon. In July, the country received 4.8?ove normal rainfall at 294.1 millimetres, according to the India Meteorological Department. In northwest India, it was 13% higher at 237.4 millimetres. Uttar Pradesh, a major sugarcane growing region falls under northwest India, as per the weather bureau. As on Monday, the area under sugarcane rose nearly 3% on year to 5.7 million hectares, according to data released by the Ministry of Agriculture and Farmers Welfare.

 

Due to expectations of higher sugar availability this season, around 4-5 million tonnes of sugarcane-based feedstock are expected to be diverted for ethanol production. However, millers are adamant that they would not divert sugar for ethanol if the price of ethanol from sugar–based feedstock is not hiked, market participants said.

 

Currently, prices for ethanol from sugarcane juice is INR 65.61 per litre and from B-heavy molasses INR 60.73 per litre, unchanged since 2022-23. On the other hand, the government has raised the rate for ethanol made from C-heavy molasses to INR 57.97 per litre from INR 56.28 for 2024-25 (Nov–Oct).

 

Contrary to this, the procurement price for ethanol produced from maize in India is way higher at INR 71.86 per litre for ethanol supply year 2024-25. This is why maize as a feedstock accounts for over 50% of the ethanol production. This has been one of the major factors, why diversion of sucrose for ethanol has been lower at 3 million than the estimated 4 million tonnes in the ongoing ethanol year.

 

However, millers might not completely stop diversion of sucrose for ethanol as millers have invested in ethanol plants and they have to repay loans by generating revenue from selling ethanol, said G.K Sood, the chairman of MEIR Commodities. "I doubt anybody will not supply, as they have set up plants, and they have to pay loans," he said.

 

Meanwhile, domestic consumption is likely to increase to 29 million tonnes, from 28 million tonnes which is why millers might not be left with excess sugar after meeting the demands despite higher output, experts said.

 

With production projected at 34.9 million tonnes and a carry-over stock of 5.3 million tonnes from the ongoing season, the opening stock for 2025-26 is expected to be around 5.5-6 million tonnes, after meeting tonne diversion towards ethanol at an estimated 5 million tonnes and after meeting the domestic consumption demand at 29 million tonnes, Jain said. Domestic demand is likely rise with an increasing population every year, Jain added.

 

Currently, the demand for sugar is not firm, although prices rose by INR 90-INR 100 per 100 kg after the release of the sales quota for August.

 

The government released a sales quota of 2.2 million tonnes for August, which was initially considered to be insufficient by the millers owing to a line up of festivals during this month, said Naresh Gupta, a trader from north India. However, after the initial surge in demand at the start of the month, prices fell as demand did not sustain at higher levels, he said.

 

GLOBAL SCENARIO

Globally there are signs of stronger demand, which might support prices. China's July sugar imports surged 76% to 740,000 tonnes, and Pakistan recently tendered for 200,000 tonnes of refined sugar.

 

However, the outlook for higher sugar production in Thailand is bearish for sugar prices. On May 2, Thailand's Office of the Cane and Sugar Board said that the country's 2024-25 sugar production rose 14% on year to 10.0 million tonnes. Thailand is the world's third-largest sugar producer and the second-largest exporter of sugar.

 

Meanwhile, the US Department of Agriculture has forecast Brazil's sugar output for the 2025-26 season to increase 2.3% to 44.7 million tonnes. Overall, global sugar availability for the upcoming season looks comfortable and sufficient to meet the demand.

 

PRICE TREND

Sugar prices across the country rose to around INR 4,000-INR 4,200 per 100 kg at the start of August as the sales quote of 2.2 million tonnes allocated by the government was deemed to be insufficient.

 

However, pices have cooled down from peak levels and are now around INR 3,910-INR 4,170 per 100 kg as demand dropped. Sood said that prices are likely to remain steady despite the upcoming festivals, as there will be no speculative buying due to expectations of higher sugar production starting October.

 

"Until November-end, prices will remain steady and December onwards when sugar production is at its peak, prices will start falling," Sood said.  End

 

US$1 = INR 87.54

 

IST, or Indian Standard Time, is five-and-a-half hours ahead of GMT

 

Edited by Deepshikha Bhardwaj

 

 

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