Dussehra is on October 20 and Diwali on November 8. However sugar is already tasting bitter, nicely earlier than the pageant season.
In line with the division of client affairs, the all-India modal retail value, the speed at which most purchases are reported, was Rs 65 per kg on Friday. It was solely Rs 45 on July 21 and rose to Rs 50 by July 31.
Merely put, retail costs of the sweetener — probably the most important ingredient in each Diwali mithai and Cadbury Celebrations, Nestlé KitKat or Ferrero Rocher candies — have soared by Rs 20/kg in only a month.
No much less important is ex-factory costs. These charges, which mills realise from promoting sugar web of products and gross sales tax, had been at Rs 57-60 per kg in Uttar Pradesh, Rs 62.5-64 in Maharashtra and Rs 63-64 in Karnataka on August 20. The corresponding value vary for the three states stood at Rs 44.95-46.7, Rs 46.2-46.9 and Rs 46.25-47 per kg respectively on August 1.
What explains this sudden surge?
The principle purpose is less-than-expected sugar manufacturing and shares which might be at a nine-year low.
In early-November 2025, the Indian Sugar & Bio-energy Producers Affiliation (ISMA) estimated the home manufacturing for the 2025-25 season (October-September) at 343.5 lakh tonnes (lt) in gross phrases. After factoring in diversion of 34 lt in the direction of ethanol manufacture, the web sugar output was pegged at 309.5 lt.
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The sugar stability sheet
However the newest business estimates put gross sugar manufacturing at 309 lt and diversion to ethanol at 30 lt, leaving a web output of 279 lt. That’s 30.5 lt under the unique projection by the apex affiliation of personal sugar mills in India.
With opening shares of simply over 50 lt on the season’s begin, the sugar out there after including manufacturing for 2025-26 could be about 329 lt. Deducting home consumption of 280 lt and exports of 8 lt, the season would shut with shares of round 41 lt. That, because the desk (above) exhibits, is the bottom for the reason that 39.4 lt for 2016-17.
There are some within the business who say that the opening shares for 2025-26 was solely 48 lt and never 50.03 lt. If that had been true, then the closing inventory for this season could be 39 lt – the bottom since 2008-09.
Why have projections been so off the mark?
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The sugarcane crop in Maharashtra, Karnataka and Gujarat suffered from extra rainfall in September-October final 12 months with a delayed withdrawal of the southwest monsoon.
The resultant waterlogged fields, together with lack of sunshine, disadvantaged the standing crop of aeration and daylight. If affected cane progress and accumulation of sucrose within the stalks, translating into decrease yields and sugar restoration by mills.
ISMA had, in November, projected sugar output in Maharashtra and Karnataka at 130 lt and 63.5 lt, whereas the mills there might solely produce 99.2 lt and 47.2 lt respectively. Uttar Pradesh factories have additionally produced 89.7 lt, as in opposition to the sooner estimate of 103.2 l, with the crimson rot fungal illness and prime shoot borer insect pest being the chief villains. The dominant Co-0238 sugarcane selection grown within the state has been more and more prone to their assaults, displaying up in yield and sugar restoration losses.
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Common ex-factory sugar costs in Maharashtra fell from Rs 38.31 to Rs 36.98 per kg between September 2025 and April 2026, earlier than recovering to Rs 38.23 by June. Costs actually rose from July, averaging Rs 41.85 per kg that month.
“There have been two key triggers. The primary was the surprising manufacturing shortfall and doubts on the precise shares mendacity with mills. Some liquidity-strapped mills had already offered sugar past their government-fixed month-to-month quotas for releasing into the market. In order that they hardly had any sugar left and the shares declared by them had been on paper,” an business supply stated.
The second issue was this 12 months’s monsoon. The excessive rainfall deficiency in June, notably for Maharashtra and Karnataka, satisfied the commerce that cane yields and sugar manufacturing will take a success within the ensuing 2026-27 season too.
“The larger retailers and stockists, moreover bulk industrial shoppers, had begun taking positions even earlier than July. From August, some mills themselves began holding again gross sales in anticipation of upper costs within the run-up to the pageant season,” the supply added.
How a lot is sugar diversion for ethanol responsible?
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On the face of it, the 30 lt of sugar that went for making ethanol within the present season appears important.
However the impact of that has been magnified by gross sugar manufacturing itself — i.e. earlier than ethanol diversion — being 34.5 lt decrease than the preliminary estimates. Not many would have envisaged this extent of decline, go away alone a spurt in costs from July, at the beginning of the season.
A sugar mill in Uttar Pradesh’s Shamli district. Praveen Khanna/file
Attributing the current skyrocketing of sugar costs to the ethanol-blending petrol programme will not be proper for a second purpose as nicely.
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Out of the overall 810.67 crore litres of ethanol equipped to grease advertising corporations for mixing throughout November 2025 to July 2026, solely 259.24 crore litres or 32% was from sugarcane-based feedstock: direct juice/syrup (147.6 crore), B-heavy molasses (98.19 crore) and C-heavy molasses (13.45 crore).
The stability 551.43 crore litres or 68% ethanol got here from distilleries utilizing grain-based feedstock: maize (288 crore), Meals Company of India rice (207.1 crore) and damaged/broken foodgrains (56.33 crore). Linking spiralling sugar costs to ethanol diversion is clearly an exaggeration.
What has the federal government performed to examine sugar costs? What extra can it?
On Might 13, the Modi authorities banned export of all sugar from the nation until September 30, 2026. This was extra of a precautionary transfer on its half, slightly than any agency conclusion of an impending provide scarcity.
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On Thursday, it allowed import of as much as 10 lt of uncooked sugar at zero responsibility until October 31, versus the usual tariff of 100% on the sweetener. This uncooked sugar might be processed by corporations similar to Shree Renuka Sugars and Shri Dutta India Non-public Ltd that function refineries in Gujarat’s Kandla port.
The refined sugar from the imported raws can doubtlessly provide the home market until Indian mills are able to begin cane crushing operations from end-October to early-November.
In addition to banning exports and allowing duty-free imports, the Modi authorities, on July 28, imposed a stocking restrict of 400 tonnes on all sugar sellers. Additional, no vendor might maintain any sugar past 30 days of receiving such inventory.
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On August 13, it issued a letter to all sugar mills directing them to furnish particulars of bulk shoppers (tender drink and confectionery makers, sweetmeat sellers, and so forth) to whom 500 tonnes or extra sugar had been offered yearly “straight or by brokers” in the course of the 2025-26 monetary 12 months (April-March).
“One can count on the federal government to additionally direct mills to not manufacture any ethanol from direct sugarcane juice and B-molasses within the coming 2026-27 season. The precedence is to someway increase provide of sugar within the home market, together with by imports and forcing mills and merchants to promote,” the business supply stated.
