India’s Ethanol Drive Reshapes Sugar Market Dynamics Amid Stable European Prices

The global sugar market is witnessing significant transformation, as India’s ethanol blending policy has begun to reshape the sector’s supply and demand fundamentals. India, one of the world’s largest sugar producers, is diverting increasing volumes of sugarcane and molasses toward ethanol production—a move with wide-ranging effects from farm gate to international trade flows. The government’s focused efforts resulted in a 33% year-on-year jump in ethanol output to 1.63 billion liters for 2024–25, reducing the country’s sugar surplus by 4 million tones.

At the same time, higher payments to farmers and improved cash flow for mills underscore the broader economic impact. While Indian policy is setting a new market equilibrium, sugar prices in key European regions have stayed largely stable, reflecting the steadiness of regional production and stock levels. With both global weather patterns and policy shifts in India at play, the coming months will test the resilience of this new market framework.

📈 Prices

Product	Country	Location	Quality	Closing Price (EUR/kg)	Weekly Change	Market Sentiment
Sugar granulated (ICUMSA 32, 0.300–0.600 mm)	GB	Norfolk	Standard	0.53	0.00	Neutral
Sugar granulated (ICUMSA 32, 0.450–0.600 mm)	GB	Norfolk	Standard	0.53	-0.01	Neutral
Sugar granulated (ICUMSA 45, 0.212–0.425 mm)	GB	Norfolk	Standard	0.53	-0.01	Neutral
Sugar granulated (ICUMSA 45, 0.4–1.00 mm)	UA	Vinnytsia, UA	Standard	0.53	0.00	Neutral
Sugar granulated (ICUMSA 45, 0.4–1.00 mm)	UA	Vyškov, CZ	Standard	0.50	0.00	Neutral
Sugar granulated (ICUMSA 45, 0.4–0.65 mm)	DE	Berlin	Standard	0.63	-0.01	Bullish
Sugar granulated (ICUMSA 45, 0.5–0.75 mm)	CZ	Vyškov	Standard	0.54	-0.01	Neutral
Sugar granulated (ICUMSA 45, 0.2–1.2 mm, purity 99.7%)	LT	Mirijampole	High Purity	0.51	-0.01	Neutral

🌍 Supply & Demand Drivers

• India’s Ethanol Policy: Diversion of sugarcane to ethanol has trimmed Indian sugar surpluses, with production redirected to 1.63 bn liters ethanol (+33%), reducing excess stocks by 4 million tonnes.
• Farmer Payments: Policy-driven cash flows have resulted in USD 1.8 billion in payments to growers in two years.
• European Stability: No major disruptions reported in European beet or cane production regions. Price stability is notable in Germany, Lithuania, Czechia, and the UK.
• Global Balance: Reduced need for Indian sugar exports alleviates pressure on world market prices.
• Speculative Positioning: Neutral to mildly bullish as funds await visibility on India’s ethanol expansion and potential impact on global trade flows.

📊 Fundamentals

• Production: India remains key producer, but more cane channeled to ethanol. EU producers maintain steady output. Brazil’s output robust but closely watched for weather.
• Inventories: Global stocks are balanced, though India’s move to restrict surplus supply provides underlying support.
• Demand: Structural demand steady globally, with policy-driven diversification into biofuels boosting trade in ethanol as a parallel market.
• Policy Impact: India’s price support and supply contracts underpin farmer income, sustaining supply side stability.

⛅ Weather Outlook

• India: Monsoon patterns generally favorable, though localized dryness could cap yields in some regions by late season. Short-term effect minimal but monitor for volatility.
• Brazil: Normal to above-average rains forecast for Center-South, supporting cane yields. Early cane harvest healthy, supporting output pace.
• Europe: Mild autumn temperatures support beet harvest in northern/central EU, but watch for early frosts in eastern regions.

🌏 Global Production & Stock Comparison

Country	2024/25 Output (Mt)	2024/25 Ending Stocks (Mt)	Policy Impact
India	33.5 (with 4Mt to ethanol)	6.0	Export supply curbed, focus on ethanol blending
Brazil	40.0	5.8	Output robust, biofuel share high
EU	16.5	2.3	Stable, no major disruptions
Thailand	9.5	1.4	Recovering after drought

💡 Trading Outlook & Recommendations

• Maintain neutral-to-bullish bias: Indian supply diversion supportive but global stocks generally sufficient.
• Sellers: Leverage stable European prices; hold stocks as risk hedge against India tightening export quotas.
• Buyers: Consider forward contracts for Q4 2025 to hedge against emerging volatility from Indian and Brazilian policy/weather factors.
• Watch ethanol-biofuel news from India and Brazil—market balance can shift quickly with new quotas or weather events.
• Monitor EU weather for beet harvest: early frost could spark minor upside in regional prices.

📆 3-Day Regional Price Forecast

Exchange/Location	Current (EUR/kg)	Day 1	Day 2	Day 3	Trend
UK (Norfolk)	0.53	0.53	0.53	0.53	Stable
Germany (Berlin)	0.63	0.63	0.64	0.64	Mildly Bullish
Czechia (Vyškov)	0.54	0.54	0.54	0.54	Stable
Lithuania (Mirijampole)	0.51	0.51	0.51	0.51	Stable