Indian Mill Sugar Prices Fall 30% to ₹47/kg, but Retail Rates Stay Near ₹64

Sugar prices at Indian mills have fallen roughly 30% in less than two weeks, from a record ₹67 per kilogram on 18 August to about ₹47 per kilogram on 31 August 2026, but the decline has not yet reached retail shelves, according to Dainik Jagran and the Hindi edition of Business Standard.

Before the correction, sugar was selling in open markets at up to ₹80 per kilogram, while the mill-level price of ₹67 was the highest on record, Dainik Jagran reported. On Sunday, the average retail price was still ₹64.23 per kilogram and the wholesale price ₹59.72 per kilogram, Business Standard reported. The effect of the mill-gate fall shows up in wholesale markets almost immediately, but retail has not followed.

Policy measures behind the mill-gate decline

The fall followed a sequence of government interventions rather than any change in the cane crop. Mills that had refined sugar earmarked for export have been allowed to sell that output in the domestic market instead. Both publications estimate the decision will bring roughly 3-3.5 lakh tonnes — 300,000 to 350,000 tonnes — of additional refined sugar into the domestic market over the next two months, putting direct pressure on prices.

Stock-holding rules for large users have also been tightened. From 1 September, bulk consumers using more than 10 tonnes of sugar a month will not be allowed to hold more than 15 consecutive days of stock. The monthly volumes each mill sells to bulk consumers, whether directly or through dealers, will also be scrutinised. Several large buyers have already begun cutting the excess inventory they had been holding in order to comply, which adds further supply to the near-term market. Dainik Jagran also reported that the government has opened imports and had earlier banned sugar exports.

Why retail prices have not moved

Industry sources cited by both publications attribute the lag entirely to inventory bought at the earlier, higher prices.

• A typical retailer holds 10 to 15 bags of sugar, each weighing 50 kilograms, purchased when rates were high.
• Retailers do not want to sell that stock at a loss and will continue pricing it at the old rates until it is exhausted.
• Shelf prices will adjust only once cheaper new stock is bought; industry sources say the pass-through takes at least 10 days.

The structural spreads are well established. Industry sources told both publications that the gap between the ex-mill and wholesale price is normally ₹2-3 per kilogram, while the gap between the mill and retail price is normally ₹7-8 per kilogram. Applying that mill-to-retail spread to a mill price of ₹47 would imply a shelf price in the mid-₹50s per kilogram, against ₹64.23 currently. Business Standard reported that if mill-level prices hold near ₹47 per kilogram, retail prices should come down in the coming days, though not immediately.

Supply balance for 2025-26

The government maintains that domestic sugar stocks are adequate. At the same time, the production estimate for 2025-26 has been cut to 306 lakh tonnes, or 30.6 million tonnes, from an earlier 343 lakh tonnes, or 34.3 million tonnes, Business Standard reported. Annual domestic demand is estimated at 280 to 285 lakh tonnes, or 28 to 28.5 million tonnes.

That leaves a surplus of roughly 2 million tonnes over consumption before any carry-in stocks are counted, a narrower cushion than the earlier production forecast implied. For processors, bottlers and other bulk users, the immediate variables are the 15-day stock ceiling that takes effect on 1 September and the 300,000 to 350,000 tonnes of export-grade refined sugar now due to be absorbed domestically over two months. For retailers, the constraint is simpler: the 10 to 15 bags already sitting in the back of the shop.