Insight Focus
India should have 2 million tonnes of sugar available to export in 2026/27. Raw sugar exports are not workable at today’s prices. White sugar exports are limited to regional markets.
Maharashtra Sugar Imports/Exports
We project that India will produce over 36 million tonnes of sucrose in 2025/26, of which 3.5-4 million tonnes is likely to be diverted to ethanol. This compares to consumption of 28-29 million tonnes.
We therefore estimate that around 2 million tonnes of sugar could be available for export. Based on current prices, we expect exports to be focused on white sugar rather than raws.
Domestic sugar prices jumped from INR 37,800/tonne at the start of the month to INR 41,600/tonne. Prices have since come down and are trading at INR 39,500/tonne currently.
The raw sugar export margins remain negative at today’s prices as mills would earn 3c/lb below the domestic market.
Indian exporters can avail of positive margins in white sugar markets in South Asia and East Africa where India benefits from a freight advantage compared to other suppliers. However, these markets will proablby not be able to take a full 2 million tonnes of sugar.
Ethanol vs Sugar
Our view on how much sugar is diverted to ethanol is informed by the returns that mills earn from producing ethanol at the expense of sugar, as well as the competition that sugarcane-based ethanol now faces from grains-based ethanol.
Many mills/distilleries have a choice over which feedstocks they use to make sugar or ethanol based on the relative prices of ethanol paid by the oil marketing companies.
The Indian government raised prices for C-molasses by 3% for the 2024/25 season from (Rs.56.58 to Rs.57.97) to ensure that there is enough ethanol for the Ethanol Blending Program (EBP), as the 20% ethanol blending target is due this year. The government had incentivised C-molasses production to ensure that there was also enough sugar supply for domestic consumption as food security is a priority for the government.
The below chart indicates revenue generated by mills in Maharashtra (then main sugar exporting region) based on the type of feedstock used. It shows that, at current prices, there are limited incentives for mills to expand the volume of sugar they divert to ethanol.
Sugar prices are higher in Northern India compared to Maharashtra, making it even less attractive to divert sugar to ethanol.
Here are the current prices paid for ethanol by feedstock:
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