India Sugar Surge Meets Global Price Slump

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AuthorKavya Nair|Published at:
India Sugar Surge Meets Global Price Slump
Overview

India's sugar production for the 2025-26 season has surged 18.35% by January 31st, reaching 19.50 million tonnes, driven by increased mill operations and strong output from Maharashtra, Uttar Pradesh, and Karnataka. This substantial domestic supply increase occurs against a backdrop of declining global sugar prices, driven by anticipated worldwide surpluses and increased export potential from major producers like Brazil and India. Despite the robust harvest, domestic ex-mill prices are reportedly under pressure, straining mill finances.

### Global Sugar Market Under Pressure
The international sugar market is currently contending with substantial price declines, largely attributed to forecasts of significant global surpluses for the 2025-26 season. Raw sugar prices closed 2025 at approximately 15.01 cents per pound, reflecting a 16.9% drop over the year. By January 30, 2026, sugar prices further dipped to 14.26 USd/Lbs, with key futures contracts seeing notable daily losses. This bearish sentiment is fueled by robust production estimates from major players, including Brazil, and an anticipated increase in India's export capacity. Rising global inventories are a primary driver, putting downward pressure on commodity prices unless significant geopolitical or climatic events disrupt supply chains.

### Domestic Production Surges
Amidst this global price weakness, India has reported a significant uptick in its domestic sugar output for the ongoing 2025-26 season. By January 31, 2026, the country's sugar production reached 19.50 million tonnes, an 18.35% increase compared to the 16.47 million tonnes recorded in the same period last season. This expansion is supported by a higher number of operational sugar mills, with 515 active compared to 501 last year. Key producing states have shown impressive year-on-year growth: Maharashtra, the largest producer, reported a 42% rise to 7.87 million tonnes with 206 mills operational. Uttar Pradesh saw a 5% increase to 5.51 million tonnes, while Karnataka's output grew by approximately 15%. The Indian Sugar & Bio-energy Manufacturers Association (ISMA) projects the full season's net sugar production to reach 30.95 million tonnes, an 18.6% jump from the previous season.

### Economic and Financial Repercussions
While the increased production offers a large domestic supply, it coincides with declining ex-mill prices in key producing regions, reportedly falling below the cost of production for some mills. This situation strains mill finances and complicates cane payment cycles to farmers, especially as sugarcane prices have been elevated by government policies in several states. Industry bodies like ISMA and AISTA are closely monitoring crop conditions and production estimates, with varying projections for the full season. The diversion of sugar for ethanol production has been revised downwards by ISMA, potentially freeing up more sugar for the domestic market or exports. Although India has been allocated an export quota of 1.5 million tonnes for the 2025-26 season, actual shipments are anticipated to be lower, a factor that could exacerbate domestic supply pressures. The government's monthly sales quotas, adjusted for February 2026, aim to manage domestic availability and support prices, but the persistent global price weakness and substantial domestic output present a complex market dynamic for the sector.

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