Indian sugar prices hit record high as tighter supplies and festival demand drive market rally

INDIA – Indian sugar prices have climbed to record levels, rising by around 10% over the past month as tightening supplies and increasing demand ahead of the country’s festive season continue to support the market. 

According to traders and industry officials talking to Reuters, wholesale sugar prices in Kolhapur, one of India’s leading trading centres in Maharashtra, increased by 10.2% to a record 4,716 Indian rupees per 100 kilograms. 

The sustained increase in prices is expected to place additional pressure on inflation, which exceeded the central bank’s target range in June for the first time in 17 months. 

Analysts also expect stronger financial performance among listed sugar producers, including Balrampur Chini, Dwarikesh Sugar, Shree Renuka Sugars and Dalmia Bharat Sugar. 

Ashok Jain, president of the Bombay Sugar Merchants Association, attributed the increase to stronger demand and restrained supplies. 

“Demand has picked up ahead of the festival season, but mills are holding back supplies and releasing stocks gradually, expecting prices to climb further,” Jain said. 

Sugar consumption in India traditionally rises between August and November as festivals such as Ganesh Chaturthi, Dussehra and Diwali boost demand for sweets and confectionery products. 

Industry estimates indicate that sugar inventories held by mills at the start of the new season on October 1 could fall to approximately 3.5 million tonnes, the lowest level recorded in more than 30 years. Lower production during the current season, combined with exports of approximately 800,000 tonnes, has contributed to tighter market conditions. 

In response to the price surge, the Indian government introduced measures on July 28 aimed at preventing hoarding and speculative trading activities. 

Authorities imposed stockholding limits that will remain in effect until November 30, 2026. Under the new regulations, dealers are prohibited from holding more than 4,000 quintals of sugar and are restricted to maintaining inventories for a maximum period of 30 days. 

The measures follow the government’s earlier decision to prohibit sugar exports as part of broader efforts to stabilise domestic supplies and protect consumers from further price increases. Industry participants expect prices to remain elevated throughout the peak festival period. 

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