Sugar Supply and Availability Likely to Remain Complex

New Delhi. The exclusion of ethanol derived from sugarcane-based feedstocks from the tenders issued by Oil Marketing Companies (OMCs) indicates that the situation regarding sugar supply and availability in the country remains complex, with little prospect of significant improvement in the 2026-27 season. To ensure that the entire available quantity of sugarcane is utilized for sugar production, the government has prohibited the use of sugarcane juice, sugar syrup, and B-heavy molasses in the production of ethanol.

The sugarcane crop has been adversely affected by the El Niño weather pattern and weak rainfall during the southwest monsoon; consequently, sugar production is expected to either decline or, at best, remain on par with the previous season. It is noteworthy that the domestic industry is left with very low carry-over stocks of sugar, and the outlook for the upcoming production cycle is also not particularly promising. As a result, conditions in the sugar market may remain complex in the coming months.

Most analysts estimate that net sugar production in the 2026-27 season could be limited to around 27 million tonnes—approximately 1 to 1.5 million tonnes short of the annual domestic demand. This would effectively rule out sugar exports from the country and potentially necessitate imports.

While the sugar supply and availability situation may remain stable until March-April 2027, complexities are likely to increase thereafter. By July-August, a widening gap between sugar demand and supply could lead to a sharp rise in prices. The government may consider taking precautionary measures, which could include a decision to import sugar.