India’s Sugar Output Falls Sharply Amid Ethanol Diversion Surge
India’s sugar production for 2024–25 is set to decline by 19% to 25.8 MT, driven by erratic weather and increased ethanol diversion. Maharashtra’s output is down 27%, while global shortages are expected to reach 4.88 MT. With tightening stocks and strong demand, sugar prices are likely to stay firm, sustaining a bullish market outlook.
India’s sugar production for the 2024–2025 season is expected to fall nearly 19%, from 31.8 MT to 25.8 MT, driven by erratic weather and increased diversion for ethanol. The Indian Sugar and BioEnergy Manufacturers Association projects slightly higher output at 27.25 MT, factoring in 3.75 MT of sugarcane diverted for ethanol. Major producing states like Maharashtra and Karnataka have reported significant output declines. With early mill closures and low sugar recovery rates, domestic supply is tightening. Global sugar output is also forecast to decline, with the International Sugar Organization predicting a 4.88 MT global shortage. Prices are expected to remain firm amid limited stocks and growing demand.
Key Highlights
# India’s sugar output seen drop nearly 19% in 2024–25 season.
# Maharashtra output expected to fall 27% due to low recovery and early closures.
# Ethanol diversion rises sharply to 3.8 MT from 0.4 MT last year.
# Global sugar shortage forecast raised to 4.88 MT by ISO.
# Sugar prices likely to stay firm amid falling stocks and strong demand.
Sugar prices are expected to remain stable with a bullish undertone due to a significant drop in Indian and global production. India’s output for the 2024–25 season is forecast to decline nearly 19% to 25.8 million tonnes, largely because of weak rainfall and warmer winters that affected sugarcane yields. Maharashtra and Karnataka are facing steep declines in output and sugar recovery rates. As of March 23, Maharashtra’s production was down to 79.74 lakh tonnes from 106.75 lakh tonnes a year earlier, and recovery rates dropped from 10.2% to 9.46%. Early mill closures are compounding supply pressures.
Meanwhile, sugar diversion for ethanol is set to rise sharply to 3.8 MT—up from just 0.4 MT last year—significantly reducing the sugar available for the market. This shift aligns with India’s push for cleaner energy and ethanol blending targets but further tightens supply. Despite opening limited exports of 1 MT this season, total sugar exports have fallen sharply from the record 11.1 MT in 2022–23.
On the global front, the International Sugar Organization has revised world production estimates down to 175.5 MT and raised the projected global deficit to 4.88 MT. Brazil’s production dipped 5.6% through February, though a recovery is expected next season. Thailand is poised for an 18% rise in output, but global ending stocks are still projected to drop by 6.1%.
Finally
Sugar prices are likely to stay elevated in the near term, supported by ethanol-linked diversion, tightening global stocks, and reduced production across major origins.
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Source : Investing.Com
