India’s Sugar Output Set to Miss Demand for Second Year as Mills Shut Early

“Production will not even meet domestic consumption this season, despite export allowances,” a New Delhi-based trade dealer said.

India is heading toward a second consecutive year in which sugar production is expected to fall short of domestic consumption, as lower cane yields have forced mills to shut operations earlier than anticipated, according to trade officials and industry data.

Output in the ongoing 2025/26 marketing year, which runs through September, is now projected to remain below 28 million metric tons, a significant downward revision from earlier industry estimates.

At the start of the season, leading industry bodies had forecast production at around 31 million tons, comfortably above domestic demand estimated between 28.5 million and 29 million tons.The reassessment follows widespread mill closures triggered by reduced sugarcane availability.

Data from the National Federation of Cooperative Sugar Factories Ltd (NFCSF) show that 467 out of 541 mills that commenced crushing operations this season had shut by the end of March. In comparison, 420 mills had ceased operations by the same point last year, indicating a faster pace of closures in the current cycle.

Trade participants attribute the early shutdowns primarily to lower cane yields, which were affected by excessive rainfall in key growing regions. Maharashtra and Karnataka, India’s largest and third-largest sugar-producing states respectively, have seen nearly all mills close earlier than usual, according to a New Delhi-based dealer with a global trade house.

“Most sugar mills have already closed, with only a few still operational, which are expected to shut in the coming weeks,” said the India head of a global trading firm based in Mumbai, noting that production is unlikely to reach earlier expectations.

The shortfall comes despite a relatively strong start to the season. NFCSF data indicate that mills produced 27.12 million tons of sugar in the first half of the marketing year, an increase of 9% compared with the same period a year earlier.

However, the accelerated pace of closures has curtailed output in the latter half of the season, reducing overall production potential.The emerging deficit has implications for both domestic supply dynamics and pricing.

Lower production, combined with ongoing export commitments, is expected to tighten stock levels and lend support to local sugar prices, which had previously faced downward pressure due to surplus supplies.

Government policy decisions earlier in the season have also come under scrutiny in light of the revised output outlook. In February, authorities increased the sugar export quota to 2 million tons, adding 500,000 tons to the 1.5 million tons approved earlier.

The move was based on expectations of a substantial production surplus.However, with output now projected to fall below domestic consumption, the additional exports are likely to further constrain domestic availability. “The government allowed exports hoping for a large surplus.

But now it is certain that production will not even meet domestic consumption,” the New Delhi-based dealer said.Industry officials suggest that the mismatch between initial projections and actual output may have longer-term implications for stock levels entering the next season.

An official from a leading industry body said that the current marketing year began with opening stocks of approximately 5 million tons. For the next season, however, opening stocks are expected to fall below 4 million tons due to reduced production and export outflows.

This anticipated decline in carryover stocks is likely to influence market conditions in the coming months. Tighter supplies could provide sustained support to domestic prices, particularly if demand remains stable. At the same time, lower inventory levels may limit the government’s flexibility in managing exports or intervening in the market to control price volatility.

The production shortfall also underscores the sensitivity of India’s sugar sector to weather-related disruptions. Excessive rainfall, which affected cane yields in several regions this season, has highlighted the risks posed by climatic variability to agricultural output and supply chains.

While the article’s data does not provide a detailed regional breakdown, the widespread nature of mill closures suggests that the impact has been significant across major producing states.

For the industry, the current season represents a reversal of expectations. Following a decline in output last year, producers had anticipated a recovery that would rebuild stocks and support exports. Instead, lower yields have compounded supply constraints, limiting the sector’s ability to generate surplus for international markets.

Market participants are now closely monitoring the pace of remaining mill operations and any further revisions to production estimates. With only a small number of mills still operational and expected to shut in the coming weeks, the scope for additional output gains appears limited.

The evolving supply situation is also likely to shape policy decisions in the near term, particularly with regard to export management and domestic price stabilization. While no new measures have been announced in the provided data, the shift from anticipated surplus to deficit may prompt a reassessment of export policies if domestic availability tightens further.

As the season progresses toward its conclusion, the focus remains on balancing domestic demand with constrained production levels.

The interplay between reduced output, export commitments, and declining stockpiles will be central to determining price trends and market stability in the months ahead.