Sugar company stocks surged up to 4% on Tuesday following the government's approval of an additional 87,587 tonnes export quota for the 2025-26 season. According to Upstox, Shree Renuka Sugars emerged as the top performer, rising 7% to ₹24, while Dalmia Bharat Sugar gained 4% to its day's high of ₹314 on the BSE. Other major gainers included Rajshree Sugars, Gayatri Sugars, Bajaj Hindusthan, EID Parry, Mawana Sugar, and Rana Sugars, all trading between 2% and 7% higher. The rally reflects investor optimism about the expanded export opportunities amid global supply concerns and expectations of higher ethanol blending as crude supplies face disruptions due to geopolitical tensions in the Middle East.
India's sugar exports are significantly trailing the government-approved quota for the 2025-26 season, with only 3,15,517 tonnes shipped by February 2026 against the permitted 20 lakh tonnes. According to data from the All India Sugar Trade Association (AISTA), exports until February 28, 2026 show white sugar shipments at 2,57,971 tonnes, refined sugar exports at 53,664 tonnes, and raw sugar exports at 1,620 tonnes. Additionally, about 2,322 tonnes of sugar is currently under loading or awaiting shipment. The slow pace of shipments is primarily attributed to global sugar prices being lower than Indian export prices, making exports less competitive despite the government's efforts to boost exports.
The export window comes with strict timelines, requiring mills to ship allocations by June 30, 2026, with an extension till September 30, 2026 only for those achieving at least 70% utilisation. As reported by Upstox, the government had earlier permitted exports of 1.5 million tonnes for the season, and in February allocated an extra 500,000 tonnes to willing mills on a non-swappable basis. Of the 500,000 tonnes, only 87,587 tonnes were requested and approved, with the remainder lapsing. Failure to meet the 70% threshold will result in the unutilised quantity lapsing, with potential reallocation to higher-performing or willing mills. Mills failing to export the mandated 70% will face deductions from future export quotas equivalent to the shortfall. No extensions will be granted except in force majeure cases, and the quota cannot be swapped between mills.
India's sugar production is now expected to fall well below earlier industry projections for the 2025-26 crushing season due to lower cane productivity in Uttar Pradesh and early flowering of cane in Maharashtra. Industry estimates now peg total sugar production at around 290 lakh tonnes, about 26 lakh tonnes lower than earlier projections. The Indian Sugar & Bio-energy Manufacturers Association had initially projected gross production at 349 lakh tonnes, with 34 lakh tonnes expected to be diverted for ethanol production, resulting in a net sugar output of around 316 lakh tonnes. However, recent reports from major sugar-producing states indicate production may fall short of those expectations. Uttar Pradesh, India's largest sugar-producing state, is likely to see the sharpest shortfall, with sugar output now estimated at around 95 lakh tonnes, significantly below the initial industry estimate of 110 lakh tonnes.
Sugar prices are under pressure from a global surplus outlook, with analysts projecting significant oversupply conditions. The International Sugar Organization forecasted a +1.22 MMT sugar surplus in 2025-26, following a -3.46 MMT deficit in 2024-25. The ISO said the surplus is being driven by increased sugar production in India, Thailand, and Pakistan. The International Sugar Organization is forecasting a +3.0% y/y rise in global sugar production to 181.3 million MMT in 2025-26. Green Pool Commodity Specialists expect a 2.74 MMT global sugar surplus for 2025/26 and a 156,000 MT surplus for 2026/27. The USDA projects global 2025/26 sugar production will climb +4.6% y/y to a record 189.318 MMT, with global 2025/26 human sugar consumption increasing +1.4% y/y to a record 177.921 MMT.
Export destinations indicate that a large share of India's sugar shipments this season has gone to West Asia and neighbouring regions. The United Arab Emirates accounted for 25.4% of total exports, followed by Afghanistan at 22.9%. Other key destinations include Djibouti (14.6%), Tanzania (6.8%), and Sri Lanka (6.5%). As reported by ET Now, stocks such as Balrampur Chini, Dhampur Sugar, and Shree Renuka Sugar are likely to remain in focus as markets assess the impact of the revised export window and tighter output outlook. The export cap represents a historic low compared to previous years, with the 2024-25 season having no export quota and the 2023-24 season being capped at 6 MT.
