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Informist, Saturday, Aug. 29, 2026

By Afra Abubacker

NEW DELHI – Though sugar prices remain firm, the market expects the government to issue a sales quota for September that is lower year-on-year. Market participants believe the government would want to stretch the limited sugar stocks remaining with mills until November and will ask coastal refineries to fill any gap in supply by diverting some imported sugar into local markets rather than exporting it, they said.

The September sales quota is expected to be around 2.25 million-2.30 million tonnes, according to the average of five estimates polled by Informist. This is lower than the sales quota for September 2025 of 2.35 million tonnes, and broadly in line with the current month's quota of 2.25 million tonnes. Some, however, expect the September sales quota to be higher, around 2.40 million tonnes.

"My guess is that it (the sales quota) could be closer to 2.4 million tonnes, because now the government's single most important agenda is to bring down the market," Shree Renuka Sugars Executive Chairman Atul Chaturvedi said. "Prices can only fall with higher sales quota for mills coupled with the supply from port-based refineries." He said 200,000 tonnes of sugar can come from port-based refineries in September. Last week, the government allowed refineries to divert raw sugar previously imported at zero duty for export into the domestic markets. This will improve domestic supplies quickly, since the sugar has already arrived at Indian ports and is with the refineries for refining or as refined sugar.

According to market participants, sugar demand in September is estimated at 2.5-2.6 million tonnes amid festival-related demand and higher purchases to build up pipeline stocks. "I have this strange feeling that the pipeline is now sucked out," Rahil Shaikh of MEIR Commodities said. "Every trader has emptied the position. Mills have sold the August sales quota completely." Shaikh explained that given the stockholding limits set by the government, traders have cleared out their stocks. In August the government mandated traders not to hold more than 400 tonnes of sugar at a time and to dispatch all stocks within 30 days of purchase.

In addition, police teams have been conducting raids in wholesale markets, particularly in the northern markets and in Kolkata, prompting traders to buy only for immediate needs. Though these limits have disrupted trading activities and weakened market sentiment, experts see the trade reviving sooner or later because of strong festival-related demand.

Bulk users are also not allowed to hold more than 15 days' inventory for the next three months starting September. This applies to large consumers such as confectioners, soft-drink manufacturers, food-processing industries, and other institutional buyers with an average monthly sugar consumption of at least 10 tonnes.

Typically, September sees strong demand from confectioneries, soft-drink manufacturers, and food-processing industries to cater to festival season demand in the next two months. "Peak Diwali buying (of sugar) will be in the second half of September," Shaikh said. Typically, sugar demand is strong ahead of festivals such as Navratri, Durga Puja, and Dussehra, which fall in October this year, and Diwali and others in November.

"We probably need a higher release, in case we need the market to remain settled at these values," Shaikh said. He, however, said the government may allocate a sales quota of only 2.25 million tonnes, the same as for August. He pointed out that despite prices surging in July, the government had asked mills to sell only 2.25 million tonnes in August. Even when prices soared in August, the government did not announce an additional sales quota but resorted to other interventions in the market, such as the stockholding limits for traders. Market participants, therefore, believe the government is worried about available stock and is aiming to ensure it lasts until the new sugarcane-crushing season gathers pace in November.

As of August, the monthly sales quotas for the sugar year 2025-26 (Oct-Sept) added up to 24.55 million tonnes, down from 25.20 million tonnes for the same period in 2024-25, according to an official from the Indian Sugar & Bio-energy Manufacturers Association.

The government has been intervening actively in the sugar market, including permitting duty-free imports of raw sugar, to cool the record-high prices. Sugar prices had rallied since July on speculation that stocks could tighten by October, prompting panic buying ahead of the festival season. Thursday, the all-India average retail price of sugar was INR 65.05 per kg, sharply up from INR 54.06 on Aug. 20 and INR 49.50 in early August, according to traders.

The government is yet to announce the September sales quota, which is due by Aug. 31. Friday, it said the existing monthly sales quota will be replaced with a fortnightly sales quota from September, and mills must sell at least 40% of the allocation in the first week and the rest in the succeeding week. This will ensure mills sell adequate sugar throughout the festival season.  End

Edited by Rajeev Pai

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