Sugar Prices Likely to Stay Firm Due to Lower Quota and Strong Demand

02-May-2026 12:37 PM

New Delhi: The Union Food Ministry has released a sugar quota of 2.25 million tonnes for domestic sale for the current month (May), which is significantly lower than the quotas issued in April 2026 and May 2025.

Meanwhile, reports suggest that the ministry has withheld quotas for 16 sugar mills, as they allegedly sold more sugar than their allocated quota in March. These mills could have collectively received around 70,000 tonnes. If this allocation remains suspended and no alternative arrangement is made, the effective sugar quota for May 2026 may be reduced further to about 2.18 million tonnes.

Even otherwise, considering the expected demand and consumption during May, a quota of 2.25 million tonnes is not seen as excessive. The month typically experiences intense heat, leading to a significant rise in industrial demand for sugar. Products like ice cream and cold drinks consume large quantities of sugar, which could tighten the demand-supply balance and support stronger market prices.

As a result, sugar mills may not be forced to sell their stock at distress prices during this period.

On the production side, growth has not met earlier expectations. At the beginning of the season, sugar output was projected to increase by 18–20%, but by the end of April 2026, production has risen by only about 7%, reaching around 27.5 million tonnes. Earlier estimates had suggested output could exceed 30 million tonnes.

Given this scenario, mills are unlikely to hold excessively large stocks that would compel urgent liquidation.

Overall, sugar prices are expected to remain firm in the coming weeks, with a potential increase of around ₹100 per quintal compared to current levels.