India’s sugar production is likely to drop in the 2026-27 season as dry weather conditions linked to the El Niño phenomenon threaten the upcoming harvest.
The decline could further tighten supplies in India, the world’s second-largest sugar producer and the biggest consumer of the commodity.
According to a report by Bloomberg, a survey of 11 traders, analysts and sugar millers by Bloomberg estimated gross sugar output between 29 million tonnes and 31 million tonnes for the year ending September 2027.
This compares with an expected production of 31 million tonnes in the current season, according to the Indian Sugar and Bio Energy Manufacturers Association.
El Niño raises supply concerns, prices climb
The strengthening El Niño weather pattern is expected to affect sugar crops across Asia, contributing to a projected global deficit of around 260,000 tonnes, according to the International Sugar Organization. India’s sugar crop remains dependent on monsoon rainfall, which is currently about 15% below normal levels.
Concerns over lower production have supported global sugar prices, with raw sugar futures in New York rising nearly 30% this year.
India recently allowed duty-free imports of raw sugar for mills and refiners to control domestic prices, which had reached record highs. The government has also introduced stockholding limits for dealers and bulk consumers.
“The country may need to import sugar next year to build up its closing stocks,” said Yatin Wadhwana, a director at commodity trading and advisory firm Gradient Commercial Pvt. “Current domestic sugar prices are likely to encourage mills to produce more sugar rather than ethanol.”
Imports may return as stocks tighten
Market participants are divided over the outlook, with some expecting no diversion of sugar towards ethanol, while others believe India may require imports for a second consecutive year to rebuild inventories.
Analyst Claudiu Covrig said India could begin importing sugar from July next year after existing quotas are exhausted. Imports may range between 2 million tonnes and 3 million tonnes, he added.
The government has asked sugar mills to maintain reasonable prices and ensure sufficient supplies during the festival season. Officials will also monitor sugar prices closely and track production monthly to improve supply forecasts and policy decisions.
