Sugar Prices Set To Rise As Production Hits Five-Year Low Business
Sugar prices in India are set to rise as production hits a five-year low, with prices already up 5% year-on-year in Q1FY26 at ₹40.3 per kg. India Ratings estimates a 15% drop in gross sugar output to 29–29.5 million tonnes due to low cane yield and red rot disease. Increased diversion to ethanol may further cut net sugar output to 26–26.2 million tonnes.
Chennai: As sugar production is at a five-year low, sugar prices are likely to increase in the next few months after having increased 5 per cent in the first quarter. Several mills have closed since mid-May for want of cane for crushing, finds India Ratings. Sugar prices were up 5 per cent yoy in 1QFY26 and stood at Rs 40.3 per kg in May 2025. From Rs 34 per kg in July 2023, prices have moved up significantly in the past two years.
The government has also increased the fair and remunerative price of cane by 8 per cent in sugar season 2025 and further 4.4 per cent in 2026. The state advised prices are also likely to be increased by 5 per cent this year. Compounded by the five-year low sugar production, prices are expected to harden in the coming months. Ind-Ra expects India’s gross sugar production to fall 15 per cent to 29-29.5 million tonnes in the current season, lowest since 2020. This is mainly due to lower cane yield along with exacerbated by Red Rot infestation.
Furthermore, the sugar volumes diverted towards ethanol production are likely to increase to 3.2-3.4 million tonnes this year in view of the government lifting the ban on sugar diversion in August 2024. As a result, net sugar production is likely to reduce to 26-26.2 million tonnes. As of mid-May 2025, crushing in most of the mills had been closed. Cane crushing is 11 per cent lower to 277million tonnes this year against 312 million tonnes last year. end
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Source : Deccan Chronicle
