Sugar will likely be a bitter pill for Indian consumers over the next year

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Sugar production is expected to be lower this year at 27-29 mt as drought affects cane crop in Maharashtra and Karnataka; next season’s crop prospects hang in balance

By Vishwanath KulkarniSubramani Ra Mancombu

Updated - October 28, 2026 at 09:24 PM. | Bengaluru/Chennai

Sugar will likely taste bitter for consumers over the next year or even more,, as its production has been affected this season and could be hit next season too, industry stakeholders said.

In a presentation to the Inflation Analysis Division of the Reserve Bank of India (RBI), Indian Federation of Green Energy’s regional director-west Dilip Patil said sugar production could be 15 per cent lower at 27 million tonnes during the current season (October 2026-September 2027).

He attributed the reasons for lower production to deficient monsoon and El Niño-related weather conditions. “The impact is particularly visible in Maharashtra and North Karnataka. Uttar Pradesh is relatively better protected because of canal irrigation and tube-well irrigation,” said Patil.

Water uncertainty

His assessment comes amidst stakeholders projecting sugar production between 27 million tonnes (mt) and 29 mt. Global analysts peg sugar production between 28.4 mt and 29.5 mt.

Deficit rain and uncertainty over water availability are likely to impact the planting for the next season also. “Drought conditions are severe in the Marathwada region of central Maharashtra, while districts in western Maharashtra, including Sangli and Kolhapur, are also facing water shortages. The situation extends to neighbouring Karnataka,” said Ajit Chougule, Executive Director, West Indian Sugar Mills Association, in Pune.

Next year will be even more grim and critical, he said. According to Abhijit Ghorpade of Ghorpade Agrovet, a sugar broker in Kolhapur, fresh sugarcane planting for next season will also be impacted as there is confusion over water availability for irrigation.

New planting hit

New planting of sugarcane may not happen, with growers likely to shift to maize and soybeans, said Rahil Shaikh, founder and managing director, MEIR Commodities. “Even the ratoon crop (the roots from which the new plant comes after harvest) is failing due to drought. Sugarcane needs water, and there seems to be no alternative,” he said, pegging the production around 28 mt. 

Ghorpade said a lower sugarcane crop, a likely decline in recovery rate and an increase in diversion to jaggery manufacturing will have an impact on the sugarcane output. 

“As jaggery manufacturing units are offering a better price compared to the sugar factories, farmers around Kolhapur have already started selling cane to them,” he said.

Patil said against his production estimate of 26-27 mt of sugar, domestic consumption is expected to be 28.5-29 mt, implying a structural production deficit of 1.5-2.5 million tonnes.

Imports to pick up

As of October 27, 98 mills with a combined daily crushing capacity of around 9 lakh tonnes have begun crushing in Maharashtra. Of these, 48 are in the cooperative sector. About 5.5 mt of cane have been crushed so far in the state, with a recovery of 7.27 per cent.

An industry source, speaking on the condition of anonymity, said the Government should open up import of raw and white sugar on a first-come-first-served basis when the season is on. “Why should imports be left in the hands of those holding the tariff rate quota?” the source wondered. 

Patil said imports will likely gather pace after Diwali since sugar prices will tend to rise.

“Ex-mill prices will soften toward ₹40-42 a kg, remain around ₹45 through early 2027, and potentially cross ₹50 during June-October 2027,” he said.

Up 30% YTD

Shaikh said this season retail prices are unlikely to drop below ₹50 a kg unless supplies are augmented.

Data from the Department of Consumer Affairs show that the average retail price of retail sugar is currently ₹58.87 a kg. Prices across the country are ruling between ₹45 and ₹76 a kg. Ex-mill prices are quoted above ₹5,000 a quintal.

In the global market, March raw sugar futures are currently quoted at 19.42 cents a pound ($431.55 or ₹41,050/tonne), while March white sugar futures are ruling at $538.70 a tonne (₹51,225). Year-to-date sugar prices are up about 30 per cent globally. 

Winter holds key

Patil said with an opening stock of 3 mt, the near-term sugar availability is comfortable with the festival demand fully covered. “However, there will be little buffer in the 2026-27 season and any disruption in early 2027 crushing could lead to a price spike,” he said. 

Ghorpade said sugar recovery this season will depend on the severity of winter. “If the winter is mild and not severe, the recovery may get impacted,” he said.

The overall water availability is grim, with district collectors imposing restrictions on the release of river water for sugarcane and other crops.

Patil said as sugar availability is expected to be tighter this season, sugar diversion for ethanol will be minimal.

Published on October 28, 2026

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