Indian Sugar Market Faces Seasonal Squeeze Amidst Rising Production Forecast

The Indian sugar market stands at a pivotal juncture as the nation enters its high-consumption festive season. While buyers and producers alike watch inventories tighten and await the upcoming harvest, the prospects for supply and pricing are both promising and complicated. As of July, private mills held just over 9 million tonnes of sugar—a marked decline—fueling concerns about short-term availability, especially as demand traditionally peaks during festivals. There are indications that government stock management has been proactive: monthly release quotas for August and September have been ramped up by 1.5 million tonnes over last year, a move aimed at smoothing markets as consumers flock to buy. At the same time, India remains cautious about exports, holding volumes in check to prioritize domestic needs, with only modest international quotas likely this year, as witnessed by last season’s cap of 4.75 million tonnes.

Despite these near-term supply jitters, the medium-term view is more optimistic. Prospects are bright for the 2025–26 crop, with output expected to jump by more than 18% following robust monsoons and an anticipated improvement in cane yields and recovery rates. These fundamentals suggest that headline prices could soften later in the year, especially as the harvest gets underway. Yet, for now, refined sugar prices remain strong internationally, trading between $600 and $725 per tonne, even as sluggish demand and production optimism cap further rises. As the crushing season draws closer and stocks replenish, the market faces a delicate balance between short-term tightness and mid-term abundance.

📈 Sugar Market Prices

Product	Location	Type/Specification	Latest Price (EUR/kg)	Prev. Price	Update Date	Offer Link
Sugar granulated	Mirijampole, LT	ICUMSA 45, 0.2-1.2 mm, 99.7%	0.58	0.55	2025-08-04	Offer
Sugar granulated	Mirijampole, LT	ICUMSA 45, 0.2-1.2 mm, 99.7%	0.58	0.56	2025-08-04	Offer
Sugar granulated	Norfolk, GB	ICUMSA 32, 0.3-0.6 mm	0.55	0.56	2025-07-29	Offer
Sugar granulated	Berlin, DE	ICUMSA 45, 0.4-0.65 mm	0.69	0.69	2025-07-29	Offer
Sugar granulated	Vyškov, CZ	ICUMSA 45, 0.4-1.0 mm	0.54-0.58	0.54-0.57	2025-07-29	Offer

International Refined Sugar: $600–$725/t (region & quality dependent)

🌍 Supply & Demand Balance

• Indian Domestic Stocks (July 31): 9.058 million tonnes (significantly lower than prior months)
• Expected Opening Stock (2025–26): 6.8 million tonnes (up from last year)
• August-September Quotas: 4.55 million tonnes (1.5 million higher YoY)
• Production (2025–26): Estimated 34.9 million tonnes (up from 29.5 million, +5.4 million YoY)
• Exports: Likely to remain restricted (prior quota: 4.75 million tonnes)

📊 Market Fundamentals

• Demand: Festive season boosting near-term consumption in India
• Supply: Tight in short-term, improving in medium term with larger crop
• Stock Management: Aggressive government release to offset lower private stocks
• Speculation: Price capped by expectations of a large crop, sluggish import/export demand

🌦️ Weather Outlook

• Indian Monsoon: Monsoon rains above average in Maharashtra, UP, Karnataka—positive for cane development and yield potential
• Short-term: No major adverse weather events expected; continued favorable conditions likely to support current production forecast
• Other Producers: Brazil experiencing seasonal dryness but maintaining strong output; Thailand’s outlook stable

Impact: Favorable weather in India is a key driver behind rising output expectations, reducing the risk premium for new-crop sugar.

🌐 Global Production & Stocks (Comparisons)

Country	2024/25 Output (Mt)	2025/26 Forecast (Mt)	Stocks (Latest, Mt)
India	29.5	34.9	6.8 (proj. Oct 2025)
Brazil	40.3	~41.0 (est.)	Stable
Thailand	8.9	~9.0 (est.)	Improving
EU	14.2	14.5 (est.)	Modest
China	10.0	10.1 (est.)	Stable

📆 Trading Outlook & Recommendations

• Short-term: Expect moderate volatility; Indian domestic market to remain supported until new season supplies arrive.
• Medium-term: Larger Indian crop expected to weigh on prices from November onward.
• Exporters: Limited opportunity for Indian sugar exports in 2025. Prioritize alternate origins (Brazil, Thailand) for export flows.
• Importers: Monitor Indian government quotas and festival season consumption. Consider securing supply from EU and Brazil for early Q4 needs.
• Speculators: Neutral to slightly bearish; anticipate price resistance above $700/t barring weather shocks.

🔮 3-Day Regional Price Forecast (Key Exchanges)

Exchange/Market	Current Close	3-Day Forecast	Sentiment
London (ICE White Sugar)	$685/t	$670–$690/t	Neutral–Slightly Bearish
NY (ICE Raw Sugar No.11)	$23.20¢/lb	$23.00–$23.40¢/lb	Stable
CBOT (Refined)	$700/t	$700–$710/t	Neutral
Euronext (Paris)	€655/t	€650–€660/t	Neutral

Note: Market remains sensitive to updates on Indian policy and real-time weather in key producing regions.