More Stories

Informist, Monday, Jul. 27, 2026

 

By Afra Abubacker

 

MUMBAI – Following the recent surge in ex-mill sugar prices, the market expects the government to direct mills to sell more sugar in August than the quota allocated for July. However, the market participants expect the quota to remain broadly in line with the usual allocation, at around 2.30 million-2.35 million tonnes, according to the average of six estimates polled by Informist. The July sales quota was 2.2 million tonnes, while the quota for August 2025 was 2.25 million tonnes. 

 

The announcement of sugar sales quota is awaited eagerly as sugar prices have risen more than 15% in the past few weeks due to panic buying and speculation that supplies could tighten in the coming months. Deficient rainfall in the current monsoon season added a weather premium to sugar prices. During Jun. 1–Jul. 27, the cumulative rainfall over the country was 16?low normal at 342.5 millimetres.

 

To control prices, some market participants said the August sales quota could be higher than last year's 2.25 million tonnes. "We feel the quota for August could be higher at around 2.3 to 2.4 million tonnes, keeping in mind festival season and strong prices," Shree Renuka Sugars Executive Chairman Atul Chaturvedi said.

 

MEIR Commodities' Rahil Shaikh agreed. "... otherwise prices will continue to rise. The simplest reason is that southern peninsular India does have more sugar (stocks) than northern. And festival months are also about to start now," he said, adding that he expects sales quotas to be raised further in subsequent months to 2.5 million tonnes each for September and October. 

 

However, not all market participants feel that the government is likely to announce such a high quota amid worries of limited stock availability. The country has to rely on existing stocks for three more months before the new crushing season picks up pace. 

 

"India is in a tight (stock) position. The government cannot announce an excessively higher sales quota. I believe they will have to maintain the quota consistent with previous month quotas," an official from the National Federation of Cooperative Sugar Factories said. He pegs August sales quota quite conservatively at 2.2 million-2.3 million tonnes. 

 

In the nine months so far in the ongoing sugar year 2025-26 (Oct-Sep), the government has mostly been asking mills to sell 2.20 million-2.25 million tonnes. Typically, mills are given higher sales quotas in October and April, marking the beginning and ending of the sugarcane crushing season, respectively. In addition, April records higher demand from cool-drink manufacturers and ice cream makers due to summer. 

 

Typically, sugar prices tend to rise modestly in April and firm up as summer demand coincides with mills closing crushing operations by mid-April. However, according to G.K. Sood, an expert on agriculture, the recent rise in sugar prices is not seasonal. It is indicative of a supply shortage coming in. 

 

GOVT INSPECTION

The government has been increasingly scrutinising the market following the recent surge in ex-mill sugar prices. It had earlier asked sugar industry bodies to urge trade to refrain from panic buying, hoarding, and spreading misinformation about stock availability. The market was also discussing various possible government interventions to check prices and improve supplies. 

 

Though fears of government intervention have largely limited the upside, sugar prices remain firm. On Friday, the government said it would physically inspect sugar mills during the first 14 days of August to verify stocks held by mills. It will also validate the sales data against goods and services tax data for July. In case of a discrepancy, the department said it "may not allocate" monthly sales quota for October for such mills.

 

Asked if the government can physically inspect more than 500 mills across the country in just 14 days, Sheikh said, "I am sure it is a very monumental task, but not impossible." 

 

Others agreed, pointing to the fact that it is a joint effort by the Centre and state governments. "Unlike earlier, this time it's a joint effort by the Centre, cane commissionerate, and state representatives. That is some 550 mills in 14 days. So, that's about 40 mills per day," Sood said, adding previously it was only the cane commissionerate and the excise department that undertook such tasks.

 

Asked whether the government is not satisfied with mills' digital records submitted to it, Sood said, "There is a palpable worry on adequacy of stocks. The government wants to reassure itself that reported stocks and available stocks tally."

 

He pointed out that there is very little likelihood of significant data discrepancy. "For over a year, the government has been cross-verifying P-2 returns data with GST data," he said, adding that mills disclose monthly opening and closing stock along with sales data in their P-2 returns. 

 

The market is also divided in its projection for sugar closing stock as of September end. While many expect it to be around 4.3 million tonnes, some have more conservative estimates of 3.5 million tonnes and a few others peg it around 8.0 million tonnes. 

 

Typically, the sugar market considers 5.0 million tonnes a "comfortable" closing stock, as new-season sugar supplies will only pick up pace around November. The worry is not so much on the current year's supply, but for next year. The market is entering the next sugar year with limited carry-forward stocks amid forecasts of El Nio strengthening in August and September, a crucial growth window for sugarcane crop. While Uttar Pradesh crops are largely irrigated, Maharashtra sugarcane crops are rainfed, raising concerns over next year's production.  End

 

Edited by Saji George Titus

 

For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.

 

Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd. by NSE Data & Analytics Ltd., a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt. Ltd.

 

Informist Media Tel +91 (22) 6985-4000 /+91 (11) 4220-1000

Send comments to feedback@informistmedia.com

 

© Informist Media Pvt. Ltd. 2026. All rights reserved.