India faces a second year of deficit in sugar as mills close early

Trade officials said on Thursday that India's sugar production will fall below its consumption for the?second straight year as lower cane yields are forcing mills to close more quickly than usual.

Low output combined with increasing exports will likely reduce domestic stocks and support local prices which were under pressure because of surplus supplies.

The India director of a global trading house in Mumbai said that sugar production was unlikely to surpass 28 million metric tonnes this season.

"Most of the sugar mills are already closed. Only a few remain operational and will be closing in the next weeks."

At the beginning of the season, industry groups including?the Indian Sugar & Bio-Energy Manufacturers Association(ISMA)?and the National Federation of Cooperative Sugar Factories Ltd?had forecasted production?of about 31 million tons against local demand of 28.5-29. million tons.

NFCSF data shows that 467 mills out of 541 that started operations this year had to close 'by the end of March, due to lower cane yields caused by excessive rainfall. In the same period last year, 420 mills were closed.

NFCSF data show that Indian sugar mills produced 27,12 million tons in the first half 2025/26 of the marketing year, which ended in September 2026. This is an increase of 9% compared to a year ago.

A New Delhi-based dealer at a global trading house said that almost all sugar mills in Maharashtra, India's third-largest state, and Karnataka - India's second-largest state - have closed earlier than expected.

"The government permitted exports in the hope of a large surplus. The?dealer said that it was now certain that the production would not be enough to meet domestic consumption.

India increased its sugar export quota in February to 2,000,000 tons, an increase of 500,000 tons over the 1.5,000,000 tons previously approved.

According to a senior industry official who declined to give his name, after last year's production drop, the industry is counting on this season to increase stock and export surplus. However, lower output will result in fewer opening stocks for next season.

The next season will begin with opening stock of less than 4 millions tons. The official stated that this should help to firm up the sugar prices. (Reporting and editing by Jan Harvey; Rajendra Jadhav)

(source: Reuters)