Sugar prices in Mumbai have surged to ₹5,000-5,090 per quintal, marking a new high as concerns over global production and tightening market sentiment drive domestic prices higher. According to The Economic Times, the rally is being fueled by concerns over crop prospects in key producing regions, with traders citing deficient rainfall as adding a premium to prices ahead of the festival demand season. The latest surge follows sugar stocks rallying for two consecutive sessions as domestic prices climbed 8-10% in a month to a seven-year high of ₹4,400-4,800 per quintal. Major sugar companies including Balrampur Chini Mills, Dhampur Sugar, Dalmia Bharat Sugar, Shree Renuka, and EID Parry had rallied up to 8% in previous sessions.
Sugar stocks rallied up to 7% as global sugar prices climbed to multi-month highs, with The Economic Times reporting that Balrampur Chini Mills gained 5% to ₹654, Dhampur Sugar Mills gained 5% to ₹168 per share, and Uttam Sugar rose 5% to ₹278 per share. Triveni Engineering shares rose the most, rallying 7% to ₹283, while EID Parry gained over 2% to ₹794. The surge comes as US raw sugar prices moved above the $15/lb resistance level to $16/lb, while London White Sugar climbed to a 15-month high of more than $500 a tonne. In today's session, the rally was supported by expectations of strong festival demand and supply concerns across major producing regions.
The rally comes amid a rapid surge in global sugar prices, with international raw sugar prices rising to a one-year high of 16.6 cents per pound, while London White Sugar has climbed to a 15-month high of more than $500 a tonne. As reported by The Economic Times, rising global sugar prices, worsening supply prospects in Brazil, higher ethanol blending, weather risks and lower output estimates in Thailand and India are tightening global supplies and supporting sugar prices. The shift towards ethanol is further intensifying concerns over a potential sugar supply crunch, with Brazil diverting 58% of cane juice towards ethanol in June due to higher profitability. Brazil has also raised its mandatory ethanol blending target to 32% in July from 30% in June, significantly higher than the 25-27% mix seen just months earlier. Supply concerns are not limited to Brazil, with intense heatwaves and El Niño conditions across the EU and UK adding to fears of tighter supplies, with sugar output from the region trimmed to 14.98 million tonnes.
Supply concerns are mounting across major sugar-producing regions, with Thailand, the world's third-largest sugar producer, cutting its projected output by 15.6% to 9.5 million tonnes. According to The Economic Times, expectations of a global sugar deficit in the 2026-27 season (October to September) have further boosted prices. The International Sugar Organisation has forecast a deficit of 0.26 million tonnes, while Green Pool projects a global sugar deficit of 3.3 million tonnes, and StoneX estimates the shortfall at 1.7 million tonnes. India, the world's second-largest sugar producer after Brazil, is also projecting lower sugar production, with authorities physically verifying mill volumes to enforce strict hoarding limits. A Reuters report suggests that government sources and farmers indicate that lower cane availability and rising ethanol demand will leave little for exports for several years, with India having banned sugar shipments until September 30 after exporting around 800,000 tons this year. India exported an average of 6.8 million metric tonnes annually in the five seasons through 2022-23, accounting for about 10% of global shipments.
Industry participants say the government has several additional policy options if prices continue to rise, including restricting the use of sugarcane for ethanol production from October, advancing the start of the sugarcane crushing season, releasing weekly sales quotas for mills, or allowing sugar imports at zero duty. According to The Economic Times, with production concerns mounting across major sugar-producing regions and global benchmark prices continuing to climb, the supply outlook has emerged as the key factor driving the sharp move in sugar prices. The government is expected to announce restrictions on sugar diversion to ethanol production, with 24 lakh tonnes likely to be diverted in the current season (October-September), down from 34 lakh tonnes in 2024-25. Indian sugar prices are expected to remain high for at least the next three months as supplies tighten while demand rises due to the Indian festival season, with the industry estimating closing stocks for sugar season 2025-2026 at approximately 4 million tonnes.
