El Nino to impact India’s sugar output in 2026-27
India’s 2026-27 sugar production is forecast at 29–31 million tonnes as El Niño and below-normal monsoon rainfall threaten sugarcane output. Tighter supplies may prompt imports, while strong domestic prices could encourage mills to prioritise sugar over ethanol diversion.
New Delhi: India’s sugar production is expected to decline in the 2026-27 season as El Niño-driven dry conditions threaten the crop, raising concerns over domestic supplies in the world’s second-largest sugar producer, Bloomberg reported.
Gross sugar production is projected at 29 million tonnes to 31 million tonnes in the season ending September 2027, according to a Bloomberg survey of 11 traders, analysts and sugar millers. The estimate compares with around 31 million tonnes projected for the current season by the Indian Sugar and Bio-Energy Manufacturers Association.
The strengthening El Niño phenomenon is expected to affect sugarcane and other crops across Asia. The International Sugar Organization had warned in May of a potential global sugar deficit of around 260,000 tonnes. India’s monsoon rainfall, critical to sugarcane production, is currently around 15% below normal, adding to concerns over next season’s crop.
Expectations of tighter sugar supplies have already supported global prices, with raw-sugar futures in New York gaining around 30% so far this year.
The possibility of lower production has also increased the prospect of India turning to imports. Last month, the government allowed sugar mills and refiners to import raw sugar duty-free to help ease record-high domestic prices. It also introduced stockholding limits for dealers and bulk consumers.
India may need to import sugar next year to rebuild its closing stocks, said Yatin Wadhwana, director at commodity trading and advisory firm Gradient Commercial Pvt Ltd. He added that elevated domestic sugar prices could encourage mills to maximise sugar production rather than divert cane towards ethanol.
The Bloomberg survey showed a divided outlook on ethanol diversion. Six respondents expect no sugar diversion towards ethanol, while five believe India may need to import sugar for a second consecutive year to rebuild pipeline inventories.
India could begin importing sugar as early as July next year after the current import quota is exhausted, according to Claudiu Covrig, lead analyst at Covrig Analytics. He estimated that imports could reach 2 million to 3 million tonnes, particularly if production falls further in the 2027-28 season.
The government is meanwhile closely monitoring the domestic sugar market. Ashwini Srivastava, joint secretary for sugar in the Food Ministry, said on Thursday that sugar mills had been asked to keep prices reasonable and maintain adequate supplies during the festival season.
The government will also monitor sugar prices closely and begin tracking production on a monthly basis, Srivastava said. The move is aimed at improving production and supply forecasts and enabling the government to take more informed policy decisions.
With lower production expected, weak monsoon conditions and the possibility of limited ethanol diversion, the balance between domestic consumption, closing stocks and imports is likely to remain a key factor for India’s sugar market through the next season.
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Source : ChiniMandi
