Sugar Ex-Factory Prices Hit Rs. 5,400 per Quintal as Rally Continues; Wholesale Rates Reach Rs. 5,800
India’s sugar prices have surged to record levels, with Uttar Pradesh’s M-grade sugar reaching Rs. 5,400 per quintal ex-factory and wholesale prices touching Rs. 5,800. Tightening supplies, lower production, exports and ethanol diversion could push closing stocks to a multi-decade low, raising concerns over further price increases during the festive season.
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Sugar prices in India have climbed to record levels, with Uttar Pradesh’s M-grade sugar reaching an ex-factory price of Rs. 5,400 per quintal on August 18. A five per cent GST is applicable over and above the ex-factory price. The sharp rise is expected to continue in the coming days, adding to the Centre’s concerns over domestic sugar supplies and prices.
Despite lower production, sugar exports and diversion of sugarcane-based feedstock towards ethanol production are expected to push closing stocks at the end of the current sugar season to a record low. The tightening supply situation is already being reflected in domestic prices.
In Maharashtra, ex-factory sugar prices have risen to around Rs. 5,300 per quintal. Including GST, the price is reaching Rs. 5,550-5,600 per quintal.
Spot prices have also surged. Sugar is being quoted at around Rs. 5,775 per quintal in Delhi and Rs. 5,754 per quintal in Muzaffarnagar. The increase in ex-factory prices is also feeding into wholesale markets, with Delhi’s wholesale sugar price reaching around Rs. 5,800 per quintal.
The higher wholesale prices are expected to feed through to the retail market, where sugar prices have already reached Rs. 58-60 per kg in some markets. A further rise during the ongoing festive season could add to the government’s concerns over food inflation.
However, the gap between market prices and official retail price data highlights a significant divergence. According to the Price Monitoring Division of the Department of Consumer Affairs, the average daily retail price of sugar is Rs. 51.68 per kg.
Sugar Prices Rise 32% in Two Months
Wholesale sugar prices have risen from around Rs. 4,400 per quintal two months ago to nearly Rs. 5,800 per quintal now, representing an increase of around 32 per cent. The sharp rise is unusual for recent years and reflects growing concerns over sugar availability.
Industry sources said that if the current price rally continues, the government may eventually have to consider sugar imports to improve domestic availability.
The Centre currently imposes a 100 per cent customs duty on sugar imports. In the global market, London white sugar has an FOB-equivalent price for India of around $523 per tonne, or approximately Rs. 4,765 per quintal. The New York raw sugar contract is trading at 16.87 cents, translating into an FOB-equivalent price for India of around Rs. 3,700 per quintal.
Industry sources told Rural Voice that the unexpected surge in prices is largely linked to a substantial gap between initial estimates made at the beginning of the production season and actual sugar production. They said the price rally could continue if supply concerns persist.
Festive Season Raises Concern
With the festive season already underway and sugar prices showing little sign of easing, the situation could pose a growing challenge for the government.
If the government is forced to allow duty-free sugar imports to address domestic supply concerns, it could have an adverse impact on the domestic sugar industry and sugarcane farmers. The Centre’s next policy move will therefore be closely watched by the industry.
Amid the recent rise in domestic sugar prices, the Centre has imposed stock limits on sugar across the country from August 1 to November 30 to curb hoarding and speculative activity. The government had also ordered physical verification of sugar stocks held by mills.
However, measures taken so far to stabilise sugar prices have not produced the desired results.
According to sources associated with the sugar trade, traders and intermediaries began accumulating stocks after the government fixed the stock limit for each dealer at 4,000 quintals. Instead of bringing prices down, this has contributed to further price increases.
Market participants had already anticipated a tightening supply situation and appear to have adjusted their stocking and trading strategies accordingly.
Government Moves to Curb Hoarding
The Union Food Ministry has accused sugar mills of encouraging speculative activity that is contributing to the rise in prices.
In a letter sent by the Directorate of Sugar to sugar mills on August 14, the government said several mills were holding stocks in excess of the quantities they had declared. It also pointed out that some mills were delaying deliveries even after sugar deals had been concluded, thereby encouraging speculation in the market.
The ministry warned that discrepancies in stocks could invite legal action against sugar mills under the provisions of the Sugar Control Order, 2025, issued under the Essential Commodities Act.
Sugar Mills Offer Early Crushing
Meanwhile, sugar mills have offered to start crushing operations for the upcoming season earlier than scheduled to ensure adequate supplies in the domestic market. In return, mills have sought several concessions, including relief on GST.
However, industry sources said bringing forward the crushing season may not be easy because of several practical constraints.
Industry estimates suggest that India’s closing sugar stock could fall to 3-3.3 million tonnes as of September 30, 2026, at the end of the current season. If realised, this would be among the lowest closing stocks in several decades.
Such a low carryover stock could put additional pressure on sugar supplies during the first two months of the 2026-27 season, before fresh production becomes available in significant quantities.
The Centre had ordered physical verification of sugar stocks at mills on July 24, with the process scheduled to be completed by August 14. However, the government has not yet released the sugar stock figures following the completion of the verification exercise.
The release of official stock data could help reduce speculation in the market by providing greater clarity on the actual availability of sugar. With prices already at record levels, the government’s assessment of stocks and its next policy response will be critical in determining the direction of the market in the coming weeks.
