Global Sugar Prices Tumble Amid Brazil's Surplus, India's Sector Stays Resilient
In a significant market shift, global sugar prices have experienced a sharp decline, primarily driven by an oversupply from Brazil. According to a recent report by ICRA Limited, this downturn contrasts with a stable outlook for the Indian sugar sector, which continues to demonstrate resilience amidst international volatility.
Price Plunge and Supply Dynamics
The report highlights that international sugar prices for SY2026 have fallen below the current cost of production and domestic price levels, largely due to surplus sugar supply from Brazil. This oversupply has led to a notable drop in raw sugar prices, which decreased to USD 313 per metric tonne in February 2026 from USD 445 per metric tonne in February 2025. Similarly, white sugar prices declined to USD 408 per metric tonne from USD 532 per metric tonne over the same period.
Additionally, the premium between white and raw sugar widened to USD 95 per metric tonne in February 2026, up from USD 87 per metric tonne in February 2025, reflecting changing market conditions.
Global Production and Consumption Trends
Global sugar production for SY2025-SY2026 is estimated at 189.3 million metric tonnes, marking a 5 per cent increase from the previous year. In contrast, global consumption is projected to rise by only 1 per cent year-on-year, reaching 178.1 million metric tonnes. This disparity between production and consumption has contributed to the surplus and subsequent price pressures in the global market.
India's Stable Sugar Sector Outlook
Despite the volatility in global prices, India's sugar sector remains on a stable footing. The Indian Sugar Mills Association's third advance estimates project gross sugar production in SY2026 to increase by 9.4 per cent to 32.41 million metric tonnes, compared to 29.6 million metric tonnes in the previous year. After diverting an estimated 3.1 million metric tonnes towards ethanol production, net sugar production is likely to settle at 29.3 million metric tonnes.
With domestic consumption expected at 28.3 million metric tonnes and exports projected at 0.7 million metric tonnes, closing sugar stocks are anticipated to reach 5.6 million metric tonnes, equivalent to about two months of consumption. This comfortable demand-supply situation supports a stable outlook for the sector.
Financial Performance and Ethanol Blending Progress
ICRA expects the operating margins for integrated sugar mills to remain range-bound at around 10-10.5 per cent in FY2026, up from 9.6 per cent in the previous year. Profitability is bolstered by improved cane availability, firm domestic sugar prices, and a comfortable performance in the distillery segment. Revenue growth for these mills is projected to be moderate at 5-8 per cent in FY2026, supported by higher cane availability and stable sugar prices. However, margins are expected to remain broadly stable due to increased cane prices and stagnant ethanol prices.
India continues to make strides in ethanol blending, achieving a blending ratio of 19.98 per cent during the first three months of ESY2026, with 239 crore litres blended, including 59.2 crore litres in January 2026. This progress aligns with national goals for renewable energy integration.
Pricing Adjustments for Sugarcane
For SY2026, the Fair and Remunerative Price (FRP) for sugarcane has been increased by Rs 15 to Rs 355 per quintal for a basic recovery rate of 10.25 per cent. In Uttar Pradesh, the State Advised Price (SAP) has been raised to Rs 400 per quintal for early-maturing varieties and Rs 390 per quintal for normal varieties, providing support to farmers amidst evolving market conditions.
