India Sugar Prices Surge as Production Outlook Weakens Sharply by Amit Gupta, Kedia Advisory
India’s sugar market faces tightening supply in 2026/27 as erratic rainfall, waterlogging and pest infestation reduce sugarcane yields and recovery rates. Sugar production is forecast at 29.5 million tonnes, 14% below the earlier projection of 33.6 million tonnes, while consumption is expected to reach 31 million tonnes. Domestic sugar prices surged nearly 16% between July 20 and August 20, 2026, amid growing festive demand and production concerns. The government permitted 1 million tonnes of duty-free raw sugar imports and restricted bulk buyers’ inventories. Ending stocks are projected to fall to 4 million tonnes, intensifying concerns over domestic supply.
Key Highlights
* Domestic sugar prices jumped nearly 16% from $515 to $596 per tonne between July 20 and August 20, 2026.
* Sugar production forecast cut to 29.5 million tonnes, down 14% from the earlier projection of 33.6 million tonnes.
* Sugar consumption projected at 31 million tonnes, exceeding production by approximately 1.3 million tonnes.
* Government approved 1 million tonnes of duty-free raw sugar imports to ease domestic supply pressures.
* 2026/27 ending stocks forecast reduced 38.5% to 4 million tonnes amid lower production and limited import support.
India’s domestic sugar prices have surged sharply amid concerns over lower production and rising festive-season demand. Prices increased from $515 per tonne on July 20 to $596 per tonne by August 20, 2026, marking a nearly 16% monthly rise. Average retail prices reached $685 per tonne, up nearly 39% year-on-year, while wholesale prices climbed to $637 per tonne.
The price rally reflects tightening supply expectations as sugarcane production faces weather-related challenges. Domestic sugar prices have risen despite ex-mill prices declining nearly 20% following the government’s duty-free import announcement, highlighting a disconnect between mill-level prices and consumer prices. International sugar prices also strengthened, rising from $475 per tonne on June 30 to $554 per tonne in the third week of August, supported by crop losses and expectations of a global supply deficit of approximately 3.5 million tonnes.
The price rally reflects tightening supply expectations as sugarcane production faces weather-related challenges. Domestic sugar prices have risen despite ex-mill prices declining nearly 20% following the government’s duty-free import announcement, highlighting a disconnect between mill-level prices and consumer prices. International sugar prices also strengthened, rising from $475 per tonne on June 30 to $554 per tonne in the third week of August, supported by crop losses and expectations of a global supply deficit of approximately 3.5 million tonnes.
To control prices, the government approved 1 million tonnes of duty-free raw sugar imports and capped inventory holding periods for bulk consumers at 15 days from September 1 to November 30. However, 2026/27 ending stocks are forecast to fall to 4 million tonnes from the earlier estimate of 6.5 million tonnes, reflecting weaker production and limited import support.
Lower production, festive demand and declining stock forecasts are likely to keep India’s sugar market under pressure, despite government import measures aimed at stabilising prices.
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