Low ending stocks will likely force India to stop sugar export, ethanol diversion early next season

However, with depleting stock of sugar in the country and limited option available to the government to augment supply, the festival demand during October-November will have to largely depend on fresh production.

Historically sugarcane crushing peaks up after Diwali when labour returns to work in sugarcane field and since this year the festival is to be celebrated November 8, the government might have to curb diversion of sugarcane juice to ethanol at least to first three months of the 2026-27 season to make sure domestic market gets adequate sugar, sources said.

With the sugar quota to August announced by the Food Ministry, total allocation during October 2025-August 2026 has reached 245.5 lt, which is 2.6 per cent reduce than 252 lt in the year-ago period. sector sources said that some mills have been selling greater sugar in the market than their allotted quotas to which the government has also been cutting their entitlements.

As against 201 lt sugar allocated by the government during October 2025-June 2026, as much as 214 lt was sold, sector sources said. Sensing that there might be reduce sugar available with mills, the government on July 24 announced it would conduct physical verification of stock in every mill in the first fortnight of August. Besides, stock limit has been imposed.

“All these steps show panic interaction after allowing sugar to export and ethanol without ensuring adequate reserve to the domestic market. This lesson might discourage the government to allow any sugar (sucrose) to ethanol next year as it will be at the cost of domestic stock,” an sector veteran said.

If sugarcane juice is curbed, only B- and C-heavy molasses are the other two options to ethanol feedstock and allowing B-heavy molasses means reduced sugar production and C-heavy molasses production can be about 300 crore litres, he said adding there is also demand from liquor, medical, chemical and other manufacturing sectors to the alcohol/spirit.

Asked on the sugar scenario in India, G K Sood, a former India head of a global trading firm, said that even if 35 lt opening stock as on October 1, 2026 is presumed to be available, historically production in the first month does not cross 5 lt, making availability to maximum 40 lt in October. “If the government maintains domestic sales quota to October 2026 at same level as a year ago, 24 lt sugar will be needed, leaving a surplus of 16 lt to November,” said Sood.

He said that at the current crop conditions and acreage position, so far, India’s sugar production in 2026-27 might at best be at the same level as this season. however, as export and diversion to ethanol is unlikely next year, the government might be able to raise closing stock on September 2027 to about 50 lt. However, the fate of sugar will depend on how the rainfall and temperature fans out in next two months.

Government data show that India’s sugarcane sowing is already over and reported to be at 57.58 lakh hectares (lh) this year. The final area under cane in 2025 was 58.84 lh. The government said that among the top three states (account to India’s 85 per cent sugar production), Uttar Pradesh has reported an area coverage of 28.97 lh, Maharashtra 11.82 lh and Karnataka 6.61 lh. In 2025, the final sugarcane area in Uttar Pradesh, Maharashtra and Karnataka were 28.02 lh, 13.72 lh and 6.51 lh, respectively.

“The crop is in very good conditions and if all go well in next two-three months, the yield might be higher this year as there was a drop in 2025,” said Param Jeet Singh Hudda, a sugarcane farmer in Shamli district of western Uttar Pradesh. He said pest appeared in the crop in many areas in the region around mid-August last year and it had actually lowered the yield.

Published on July 29, 2026