Sugar output may fall in 2026-27, no ethanol diversion: Industry

In the previous season, out of gross sugar production of 31 MT, about 3 MT was diverted for ethanol production. For the 2026-27 ethanol supply year (November-October), the government will soon announce measures to stop mills from diverting sugarcane juice and B-heavy molasses for biofuel manufacturing to ensure adequate sweetener supplies in the market this season. ISMA has projected consumption in 2026-27 season is likely to be between 28.5 MT – 29 MT.

“But the real impact of the weather is not yet known till harvesting starts. We will do some yield assessment after 10-15 days,” he said. Due to a spike in prices in August, the government had allowed 1 MT of raw sugar from Brazil to augment supplies. However, because of higher global prices against domestic prices, imports so far have been insignificant according to Ballani. “As crushing of sugarcane has commenced in Maharashtra, prices are expected to stabilize, but eventually next year by June-July we will require the imports to come at least 1 MT of sweetener,” he said.

The opening stock of sugar with mills at the beginning of the 2026-27 season has declined to 3.5-3.6 MT, the lowest in over a decade, due to lower production, industry sources said. The average retail price of sugar stood at Rs 57.82 a kg on Friday, up 24% year-over-year. However, prices declined by 2% month-on-month, according to the Department of Consumer Affairs’ price monitoring cell. An official said prices could fall to Rs 52/kg as sugarcane crushing is set to commence across key growing states including Uttar Pradesh, Maharashtra and Karnataka, in the next two weeks.

The ministry stated that for instance, if a mill produces 1,000 tonnes in October, it can sell that quantity in either October or November.”This will be over and above the quantities allocated under regular monthly release quotas for the aforesaid months," it noted. The food ministry has allocated sugar for sale in the domestic sugar for sale in the domestic market every fortnight. For the first fortnight of October, the ministry has allocated 1.3 MT for sale, while the second half the mills would sale 1.4 MT of sweetener.

In the last five years, the quantity of sugar diverted towards ethanol production has seen a nearly four-fold increase from 0.8 MT in 2019-20 to around 3 MT in 2025-26 sugar season, according to analysis by Crisil.