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Informist, Wednesday, Aug. 26, 2026

MUMBAI – Sugar prices in India are likely to continue rising till September despite the government allowing duty free imports of 1 million tonnes of raw sugar till October end. However, the magnitude of the increase is expected to moderate, according to Crisil Intelligence. The research and consultancy firm has revised down its estimate for the average growth in sugar prices to 7% from 9% earlier for the sugar season 2025-26 (Oct-Sept).

Consecutive declines in sugar production in the last two years due to lower yields and reduced acreage, along with higher diversion of sugar equivalent towards ethanol, has tightened inventories despite steady growth in demand, Crisil Intelligance said in a report. Ethanol diversion has risen consistently over the last five years, and is expected to rise further next year.

"The resultant supply tightness, along with rising cane costs driven by higher FRP and SAP, supported a sharp increase in sugar prices. Although sugar production is estimated to recover by ~8% in SS26 (sugar season 2026), robust domestic demand and low opening stocks are expected to keep inventories under pressure," the report said.

Integrated sugar mills' margin is projected to expand a modest 50 basis points despite a sharp increase in sugar price realisations. "The upside from higher sugar prices and moderate volume growth is likely to be largely offset by increased cane costs..." it said. Profitability in the distillery and cogeneration segments is expected to remain broadly stable, supported by steady ethanol prices despite softer distillery volumes.

Lower closing inventories are expected to support price realisation next season while better performance in the distillery and cogeneration segment should support profitability. Industry margins could expand 100-200 bps, it added.  End

Reported by Ashutosh Pati

Edited by Akul Nishant Akhoury

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