Sugar market’s round trip: Sugar ex-mill prices erase entire rally, back to ₹43 from ₹70 per kg – Editorial by Uppal Shah
India’s sugar market has corrected sharply after ex-mill prices surged from Rs 43-44/kg in mid-July to nearly Rs 70/kg. Government stock limits, duty-free raw sugar imports and weaker buying have increased availability. The industry now seeks early crushing, white sugar imports and soft loans amid drought concerns in Karnataka.
Every sharp rally eventually meets its correction, and India’s sugar market has just lived through one of the fastest of the two. Ex-mill prices, which had climbed to levels unseen in years, have fallen back just as quickly, and the reason is not the market healing itself but the Government stepping in with intent.
The correction comes after an unprecedented rise in sugar prices over the past several weeks. In Maharashtra, ex-mill prices were around Rs 43-44 per kg in mid-July. Prices subsequently surged to nearly Rs 70 per kg in western Maharashtra and Karnataka as concerns over supply triggered aggressive buying and stock accumulation.
The market has now taken a complete turn. With government measures beginning to impact physical availability, additional sugar is entering the market and buyers have become cautious. Ex-mill prices have consequently come under significant pressure and have moved back towards the levels seen in mid-July. The extent of the correction is visible in current ex-mill prices: as on September 5, M-grade sugar was trading at around Rs 4,350 per quintal in western Maharashtra, Rs 4,400 in north Maharashtra and Rs 4,380 in north Karnataka.
According to experts in the sugar sector, one of the major factors behind the correction is the 15-day stockholding limit imposed on bulk consumers from September 1st, 2026. Consumers holding inventories above the permitted level are releasing excess stocks, adding to supplies available in the market. This has coincided with weaker fresh buying. Bulk consumers and traders that had built inventories during the price rally are now reluctant to make aggressive purchases, while mills are facing greater selling pressure.
The Government has also tightened stock limits for sugar dealers. From September 15th, 2026, the permissible stockholding limit for dealers will be reduced to 2,000 quintals, from the earlier 4,000 quintals, a timely move to prevent excessive inventory accumulation and speculative activity. The Centre’s decision to allow 10 lakh tonnes of duty-free raw sugar import has further strengthened expectations of adequate domestic availability, though with domestic prices falling, the incentive to import the entire permitted quantity has weakened.
The sharp fall in ex-mill prices is expected to reach consumers over the coming days. Retail prices respond with a lag to changes in mill and wholesale rates, but with sugar now available at lower ex-mill levels, retail should move back towards normal.
That is the welcome part of the story. What comes next is less settled, and it deserves the industry’s attention now rather than in December.
The Union Food Ministry has urged Maharashtra, Uttar Pradesh, Karnataka and other states to start the 2026-27 crushing season early, hoping to add supply before festive demand builds further. Ground reports from millers tell a more complicated story than the price chart suggests. Cane crushed too early carries lower recovery, and the labour needed to bring in an early harvest may not available in adequate strength. A more realistic window is a start soon after Dussehra, with operations reaching full scale once Diwali has passed and cane maturity and labour supply fall into place together. The Ministry’s intent to ease supply pressure quickly is well placed and understandable given the festive demand outlook; at the same time, the pace of the season’s ramp-up will naturally depend on cane maturity and labour availability on the ground.
Even as domestic output improves, the safer course is to keep the import window open rather than close it off. The duty-free import has already done its job as a signal to the market, and it should now be amended to permit white sugar imports alongside raw. This costs the exchequer nothing and distorts nothing, because white sugar will only move when the parity works. If domestic prices stay soft, no importer will bring it in. If prices climb again, that quantity arrives quickly and without a fresh round of policy deliberation. An open, unused window is the cheapest insurance the market can hold.
Mills are also flagging a squeeze that has crept up alongside the supply story. Price corrections are good news for consumers, but for mills that leveraged working capital during the rally, a sudden fall in realisations tightens liquidity fast, exactly when crushing-season expenses fall due. An incentivised soft loan scheme, extended at the start of the season rather than after mills run into arrears, would let the sector crush on schedule without passing the strain on to cane payments. This is the kind of targeted support the Government has extended before, and it would sit naturally alongside the stockholding and import measures already in place.
All of this matters more than usual because next season’s arithmetic may not be as comfortable as this correction suggests. Karnataka has declared drought across 101 taluks, with another 32 under consideration, while deficient monsoon rainfall has raised concerns over crop conditions, including in some of the state’s key sugarcane-growing regions. If that crop damage carries through to the mill gate, national production in 2026-27 could come in below this season’s levels even as consumption keeps climbing.
The market has been brought back to sanity, and that is no small achievement. The task now is to keep it there, by settling the calendar, the credit and the import window well before the first cane reaches the crusher.
For further inquiries please contact Uppal Shah, Editor-in-Chief, at uppal@chinimandi.com
To Read more about Sugar Industry continue reading Agriinsite.com
Source : ChiniMandi
