India’s Traditional Sweeteners Rally While Refined Sugar Softens Amid Global Oversupply

India’s sweetener complex is showing a rare divergence: jaggery (gur), shakkar and khandsari prices have firmed on tightening arrivals and steady demand, while refined sugar has drifted lower on weak domestic offtake. This comes against a backdrop of falling world sugar benchmarks amid expectations of ample global supplies in 2025/26. The mixed signals are reshaping short-term trade flows and hedging strategies for regional sugar and traditional sweetener buyers.

Introduction

Over the past week, India’s physical sweetener markets have decoupled internally. Traditional cane-based products such as gur (jaggery), shakkar and khandsari have registered gains in key mandis, supported by reduced arrivals from major producing and trading centres including Muzaffarnagar, Shamli, Hapur and Muradnagar. Muzaffarnagar alone accounts for roughly a fifth of India’s jaggery output and is recognised as the country’s largest jaggery market, underlining the benchmark role of its prices and arrivals for the broader traditional sweetener complex.

In contrast, refined sugar prices in India have eased modestly despite still-firm international quotations. Global indicators suggest that sugar markets have entered a surplus phase: the FAO Sugar Price Index fell 4.1% in February 2026 to its lowest level since October 2020, driven by expectations of ample supplies, while ICE raw sugar futures have traded below 14–15 US cents/lb in recent weeks, a drop of roughly a third from year-ago levels.

🌍 Immediate Market Impact

The immediate impact in India has been a tightening of nearby availability for jaggery, khandsari and shakkar at the mandi level, lifting prices by approximately USD 1–2 per 100 kg across key grades. Wholesale jaggery values are now around USD 52–55 per 100 kg, with all-India mandi averages near INR 4,300 per quintal (about USD 52 per 100 kg). Khandsari is trading closer to USD 64–65 per 100 kg and shakkar at around USD 54–55 per 100 kg, reflecting firm procurement by traders and processors despite lower throughput. (All specific domestic price points are from the user-provided market context.)

Refined sugar, by contrast, has softened: ex-mill prices are reported near USD 48–49 per 100 kg, with spot markets around USD 47–48 per 100 kg. This local weakness is notable given that global white sugar is still quoted near USD 425 per metric tonne and raw sugar remains just under 14–15 cents/lb on ICE, levels that, while sharply below last year, are not yet triggering deep distress sales internationally. In effect, India’s refined sugar market is being driven more by domestic demand fatigue and policy constraints than by global benchmarks, while traditional sweeteners are reacting to localised supply tightness.

📦 Supply Chain Disruptions

The current firmness in gur, shakkar and khandsari is primarily a function of constrained arrivals rather than structural production shortfalls. Reduced flows from Muzaffarnagar and neighbouring Uttar Pradesh hubs are tightening nearby supply for wholesale buyers, particularly those serving regional confectionery, snack and beverage industries that rely on jaggery-based formulations. Given Muzaffarnagar’s concentration of jaggery capacity, even short-lived logistical or marketing bottlenecks can translate into price spikes across North and Central India.

By contrast, refined sugar flows remain ample. Industry and ratings research anticipate that India’s gross sugar production in sugar season (SS) 2025/26 and SS 2026 could rise significantly – up to about 35 million tonnes – on the back of favourable monsoon conditions and higher cane acreage in key states such as Maharashtra and Karnataka. This production recovery, combined with earlier restrictions on sugar exports and redirection of some cane to ethanol, has kept domestic inventories comfortable. As a result, there is little physical tightness at mills or ports, and logistics channels for refined sugar – road, rail and port movements – remain largely uncongested.

In practical terms, this means that while jaggery supply chains are experiencing localised bottlenecks at the mandi level, refined sugar supply chains are characterised by abundant stocks and subdued lifting, putting pressure on mill margins but limiting price rallies for downstream buyers.

📊 Commodities Potentially Affected

• Jaggery (Gur) – Directly impacted by lower arrivals from major Uttar Pradesh mandis, lifting prices and tightening nearby supply for regional users in bakery, confectionery and traditional snack segments.
• Shakkar – As a granular traditional sweetener, shakkar tracks jaggery fundamentals; firm prices reflect both limited selling and stable demand from household and small-industry buyers.
• Khandsari – Benefiting from constrained cane diversion into this semi-refined segment and steady industrial demand; higher prices may encourage mills and crushers to reassess allocation between khandsari and refined sugar.
• Refined white sugar (domestic India) – Facing downward pressure from weak consumption and ample stocks even as international white sugar trades around USD 425/t, narrowing arbitrage opportunities and discouraging large export offers.
• Refined white sugar (global) – Global benchmarks are under structural pressure from projected surplus, with the FAO index and ICE prices at multi‑year lows; India’s softer domestic refined market is broadly aligned with this bearish international backdrop.
• Sugarcane allocations (sugar vs. ethanol vs. jaggery) – Relative price performance between traditional sweeteners and refined sugar can influence farmers’ and crushers’ medium-term choices on cane allocation, especially in states where jaggery production offers competitive realisations.

🌎 Regional Trade Implications

For now, the divergence is more significant for domestic trade flows than for cross-border sugar trade. India has, in recent seasons, maintained tight control over sugar exports to safeguard internal availability and inflation targets, even as global markets move into surplus. With international raw sugar prices below 15 cents/lb and white sugar around USD 425/t, export parity from India is marginal at best once domestic prices, logistics and policy risk are factored in, limiting the likelihood of large near-term export surges.

Within South Asia, tighter jaggery availability and stronger prices in India may incentivise informal inflows of traditional sweeteners from smaller neighbouring producers or from secondary producing states within India toward deficit urban centres. Conversely, refined sugar import demand into India is unlikely to increase in the short term given comfortable stocks and falling world prices. Global surplus sugar from Brazil, Thailand and other key exporters is therefore more likely to target price‑sensitive markets in Africa, the Middle East and parts of Asia rather than India.

🧭 Market Outlook

In the near term, jaggery, shakkar and khandsari markets in India are likely to remain firm so long as arrivals in Muzaffarnagar and other major mandis stay constrained and demand from traditional channels holds. Traders in these segments will closely monitor weekly arrivals, mandi inventories and festival‑driven consumption, as any normalisation of flows could cap the recent price gains.

Refined sugar prices appear more likely to remain range‑bound to slightly weak. Ample domestic production prospects, government price‑floor mechanisms and ongoing export policy uncertainty will act as a ceiling on domestic rallies, even if global futures experience short‑covering or currency‑driven spikes. Internationally, the FAO and industry data point to continued downward pressure on sugar benchmarks through 2025/26 as global stocks rise, suggesting that volatility may be skewed toward downside tests of cost‑of‑production levels rather than a sharp bull reversal.

CMB Market Insight

For commodity traders and food industry buyers, India’s current sweetener landscape underscores the importance of segment‑specific strategies. Traditional sweeteners are behaving like constrained regional speciality markets, driven by local arrivals and cultural consumption patterns, while refined sugar is increasingly priced off a global surplus story and domestic policy framework.

Industrial users in India with flexibility to substitute between jaggery, khandsari, shakkar and refined sugar may find near‑term cost advantages in refined sugar purchases, locking in coverage while prices are under pressure. Export‑oriented players should remain cautious about assuming a rapid recovery in international sugar prices; instead, risk management should emphasise downside hedges and basis monitoring between domestic ex‑mill and ICE benchmarks. Meanwhile, any sustained premium for jaggery and related products could gradually influence cane allocation and small‑scale processing investments in northern India, subtly reshaping the internal balance between traditional and refined sweetener supply over the coming seasons.