Indian sugar prices may hit record highs as monsoon and stock concerns tighten supply
Indian sugar prices could reach record levels before the new season begins in October as weak monsoon conditions, lower production and thin inventories constrain supply. Business Standard Hindi reported that ex-factory prices may exceed ₹5,000 per quintal, potentially lifting wholesale prices to ₹55 per kilogram.
Prices rise by ₹300 per quintal in one month
Indian sugar prices may climb to record highs as festival demand approaches, with weak monsoon conditions and low inventories raising concerns about supply before the new season starts in October. Business Standard Hindi reported that market participants see a possibility of both ex-factory and wholesale prices moving above ₹50 per kilogram for the first time.
Sugar trader Sudhir Bhalotia said ex-factory prices in Uttar Pradesh currently stand at ₹4,400-4,500 per quintal after increasing by about ₹300 per quintal over the past month. Wholesale prices in Delhi have risen to ₹4,750-4,850 per quintal during the same period.
Bhalotia expects ex-factory prices to reach ₹5,000-5,100 per quintal by the beginning of the new sugar season in October. That would take the ex-factory price beyond ₹50 per kilogram for the first time. If mill-gate prices reach that level, he said wholesale sugar could rise to ₹55 per kilogram.
Production estimate falls to 28-28.5 million tonnes
The price outlook reflects a weaker supply position than the industry had previously anticipated. Bhalotia said production for the current season had been expected to exceed 30 million tonnes after the removal of the sugar quota for ethanol. The estimate has since fallen to 28-28.5 million tonnes.
Closing stocks in September are expected at only 1-1.5 million tonnes, compared with monthly requirements of 2.2-2.5 million tonnes. That gap leaves the market dependent on a timely start to production in October. If crushing and sugar output begin slowly, available supplies could become tight just as demand associated with the festive season strengthens.
Indrajit Paul, commodity expert and head of research at Agrocorp International, said current conditions make a rise above ₹50 per kilogram, or ₹5,000 per quintal, increasingly likely. He also pointed to a breakout from a long period of price consolidation and said the market was trading at new highs.
Monsoon performance remains the decisive variable
Rahul Chauhan, director of IGrain India, attributed the increase to the weak monsoon and expectations that production may decline in the coming season. If rainfall does not improve soon and sugarcane output is affected, supplies could tighten further over the next several months, supporting another rise in prices.
The current monsoon also creates uncertainty around production in the next sugar season. Paul said low carryover stocks and uncertainty over rainfall were supporting the market, but warned that a sustained move above ₹50 per kilogram would depend on monsoon performance in July and August and on expectations for next season's output.
The quoted ex-factory prices apply to Uttar Pradesh and were supplied by traders, according to Business Standard Hindi. For mills, traders, food processors and bulk buyers, the immediate focus will be the pace of rainfall, the condition of the sugarcane crop and the timing of new-season production. With projected closing inventories below one month of stated consumption requirements, delays at the start of the season could have an outsized effect on physical availability and pricing.
