India Sugar Prices Soar: Govt Considers Stock Limits
By Market Desk
India’s sugar prices are surging ahead of the new season. The government is considering stock limits for traders and mills due to supply concerns.
India is currently experiencing a notable increase in sugar prices across the domestic market, prompting the government to consider implementing stock limits on both traders and mills.
This surge occurs just ahead of the new crushing season, raising concerns about supply stability.
Key Market Movements
Ex-mill prices in Uttar Pradesh have climbed by approximately Rs 300 within a month, reaching Rs 4,400-4,500 per quintal.
Wholesale prices in Delhi are now between Rs 4,750-4,800 per quintal.
Projections indicate ex-mill prices could further escalate to Rs 5,000-5,100 per quintal by October.
Despite the tight supply situation, industry experts like Atul Chaturvedi of Shree Renuka Sugars note there is no immediate cause for alarm regarding a shortage.
They argue that while stock limits might offer temporary relief, such interventions could disrupt the crucial supply chain and do not provide a sustainable, long-term resolution.
Current Season’s Supply Dynamics
Production for the current season is estimated at 28 million tonnes.
Approximately 2.8-2.9 million tonnes have been diverted for ethanol production.
An additional 800,000 tonnes were allocated for export.
The closing stock by October 1 is projected to be between 3.5 and 3.75 million tonnes, a decrease from nearly 5 million tonnes at the start of the year.
A significant challenge for the industry stems from the government’s inconsistent policy on sugar exports, which introduces considerable uncertainty for mills.
Frequent shifts between permitting and restricting exports complicate the industry’s ability to plan production cycles effectively.
Policy Tensions and Future Outlook
Rising sugar prices also create tension for the government’s ethanol blending program.
Mills face a stronger financial incentive to sell sugar rather than divert cane for ethanol if ethanol prices are not sufficiently competitive.
Looking towards the 2026-27 season, the USDA projects a 12 percent increase in Indian sugar output, reaching 33.6 million tonnes, which could alleviate current supply tightness.
However, this optimistic forecast is heavily dependent on the monsoon, as weak and erratic rainfall, alongside El Nino concerns, poses a substantial risk to cane yields.
The industry consistently advocates for stable, long-term policies concerning exports, ethanol diversion, and pricing, viewing these as crucial for sustainable planning over short-term government interventions.