DBT Bureau
Pune, 14 July 2026
Highlights:
● Sugar prices surged over 7% in one month amid rising El Niño risks and tightening supply outlook.
● Below-normal rainfall during June intensified concerns over sugarcane yields, supporting domestic sugar prices.
● Sugarcane FRP increased to ₹365 per quintal for 2026-27, raising the production cost floor.
● India’s 18% ethanol blending target diverts nearly 3.1 MMT sugar equivalent from food supplies.
● Stronger crude oil prices amid West Asia tensions improved ethanol economics, supporting sugar demand.
● Citi remains bullish on sugar, forecasting prices to rise toward 17 cents from 14.75 cents.
● Brazil’s Center-South sugar output declined 3% during early June compared with the previous year.
● Sugarcane sowing reached 57.58 lakh hectares as of July 10, up 1.87% year-on-year.
● USDA projects India’s 2025-26 sugar production rising 7.14% to 30.00 MMT from 28.00 MMT.
● Global sugar production is forecast to increase 3.17% to 186.06 MMT during 2025-26.
● Global total sugar supply is projected to expand 1.26%, reflecting improved worldwide production prospects.
● Global ending stocks are expected to increase 3.01% to 43.52 MMT in 2025-26.
● India’s 2025-26 closing sugar stocks are estimated at 8.55 MMT, up 41% year-on-year.
● ISO forecasts the global sugar market shifting to a 0.262 MMT deficit during 2026-27.
● StoneX projects the global sugar balance swinging from 2.29 MMT surplus to 0.55 MMT deficit.
● Thailand’s 2026-27 sugar production is forecast to decline 16%, tightening global export availability.
● EU sugar beet acreage declined 8%, increasing the likelihood of tighter white sugar supplies.
● USDA expects India to post a 2.5 MMT sugar surplus in 2026-27, first in two years.
Past Outlook – 24 June 2026
Price Performance: Spot sugar prices at Kanpur stood at ₹3,950 per quintal, rising 0.77% over one month, 3.67% over three months, 6.25% over six months and 3.27% YoY. Prices remained supported by tightening global supply expectations, firm white sugar premiums and stronger ethanol demand. However, gains were capped by higher domestic production and improving Brazilian sugarcane crushing activity.
Ethanol & Policy Support: Policy support remains constructive for sugar. The government increased sugarcane FRP to ₹365 per quintal for 2026-27, raising the production cost floor. India’s ethanol blending programme continues to divert around 3.1 MMT sugar equivalent from the food supply chain. However, increasing grain-based ethanol production may gradually reduce dependence on sugarcane-based ethanol demand.
Global Supply Dynamics: Global sugar fundamentals remain mixed. ISO projects a 0.262 MMT global deficit in 2026-27, while StoneX forecasts a 0.55 MMT deficit after the previous surplus season. Thailand’s production is expected to decline 16%, and EU sugar beet acreage has fallen 8%. However, USDA projects global sugar production to rise 4.58% to 189.25 MMT and ending stocks to increase 5.05%.
Stocks & Demand Outlook: Domestic supply conditions remain comfortable despite supportive demand trends. USDA projects India’s sugar production to rise 25.89% to 35.25 MMT during 2025-26, while closing stocks are expected to increase 41% to 8.55 MMT. Export restrictions remain in place to ensure domestic availability. Conversely, monsoon weakness, El Niño risks and lower global availability expectations continue to support sentiment.
Technical Outlook: Technically, sugar has formed a Double Top pattern on the weekly timeframe, indicating weakening bullish momentum. RSI remains in the overbought zone, while MACD continues to show positive strength but is vulnerable to reversal from elevated levels. Standard deviation readings indicate high volatility. As long as prices struggle below resistance zones, corrective downside pressure may gradually emerge.
SWOT Analysis:
Strengths:
● Sugar rose over 7% in a month as El Nino risk remained a concern and supply concerns as Global sugar market to switch to a supply deficit as crops shrink.
● Price also rose as below-normal rainfall last month raised concerns over crop output.
● Sugarcane FRP for 2026-27 increased to 365 rupees per quintal, raising the floor cost.
● India’s ethanol blending target of 18% diverts 3.1 million metric tonnes of sugar equivalent.
● Geopolitical tensions in West Asia supported crudeoil prices, supporting biofuels.
● Citi says it is bullish on sugar, sees prices rising to 17 cents (current price: 14.75)
● Brazil’s center – south sugar output fell 3% in early June vs year – earlier period
Weaknesses:
● As on July 10, sugarcane sowing down in 57.58 lakh hectares, up by 1.87% from last year same period.
● The recent spell of widespread rainfall is expected to provide relief to the standing sugarcane crop
● 2025/26 India’s sugar production to increase 7.14% YoY to 30.00 MMT, supported by improved sugarcane output – USDA
● 2025/26 Global sugar production to increase to 186.06 MMT, up 3.17% YoY, supported by higher output in major producing countries – USDA
● 2025/26 Global Ending stocks to rise 3.01% to 43.52 MMT, improving global inventories – USDA
● For 2025/26 India’s closing stock of 8.55 million metric tonnes, up by 41% from 2024/25 ensures domestic supply.
Opportunities:
● Sugar production in the U.S. was projected by the government at 9 million short tons (ST), 59,000 ST less than estimated last month
● India could eventually be forced to import sugar if El Nino-related weather disruptions sharply cut cane cultivation area and output.
● El Niño threats raise concerns for Indian monsoon and 2027-28 sugar yields
● Ukraine’s white sugar output is expected to fall to 1.2-1.3 million metric tons this year from 1.7 million previous year.
● The ISO expects the global sugar market to flip to a deficit of 0.262 million metric tons in 2026/27
● Global sugar market is projected to switch from a surplus of 2.29 million metric tons in the 2025/26 season to a deficit of 0.55 million tons in 2026/27 – StoneX
● Thailand forecasts 16% drop in sugar production for 2026-27
● Lower EU sugar beet acreage of 8% creates a deficit that supports white sugar.
Threats:
● Union govt has banned the export of sugar till Sept 30 this year with immediate effect, a move aimed at enhancing domestic availability
● USDA said it expects a 2026/27 sugar surplus in India by 2.5 MMT, the first surplus in two years.
● China reduced sugar import forecasts by 556,000 tons amid stricter syrup and premix controls.
● Increased distillation of grain-based ethanol could reduce the need for sugarcane-based fuel blending.
● Economic slowdown risks may weaken demand from industries globally
● To prevent price shocks, sugar mills must now strictly file monthly returns declaring physical stock levels to match digital ledgers.
Conclusion:
Price Performance: Sugar prices at Kanpur Spot traded at ₹4,220 per quintal, extending the recent uptrend after gaining more than 7% in one month. Prices remained supported by below-normal June rainfall, El Niño concerns and stronger ethanol-linked demand. However, higher projected domestic production, rising global supplies and comfortable inventories continue to limit aggressive upside.
Production & Supply: Fundamentally, supply conditions remain mixed. USDA projects India’s 2025-26 sugar production at 30.00 MMT, up 7.14% YoY, while global production is expected to rise 3.17% to 186.06 MMT and global total supply by 1.26%. These higher production estimates improve availability and partially offset weather-related supply concerns.
Stocks, Ethanol & Policy: Government policy continues to underpin prices. The Fair & Remunerative Price (FRP) increased to ₹365 per quintal for 2026-27, while India’s 18% ethanol blending programme diverts nearly 3.1 MMT sugar equivalent from food supplies. Conversely, India’s closing stocks are projected at 8.55 MMT, up 41% YoY, ensuring comfortable domestic availability.
Global Market Outlook: Global fundamentals remain balanced. ISO forecasts a 0.262 MMT global deficit during 2026-27, while StoneX projects a 0.55 MMT deficit after the previous surplus season. Thailand’s production is expected to decline 16%, and EU sugar beet acreage is down 8%. However, India’s expected 2.5 MMT surplus may cap sustained rallies.
Technical Outlook: Technically, sugar has confirmed a breakout, strengthening the long-term bullish structure. Price continues to trade above the 50-month moving average, while trendline support remains intact. Momentum indicators including RSI and MACD remain positive, although elevated volatility suggests intermittent profit-booking after the sharp advance.
