Sweet trouble: Sugar prices surge to 17-month high as govt warns mills against festival hoarding

Raw sugar futures extended gains to their highest level since March 2025, driven by strong Indian import demand and delays to cane crushing in Brazil, the world's top producer, even as India's food ministry warned domestic mills against unjustified price increases during the festival season, according to Bloomberg.

Futures rose as much as 1.6 per cent in New York and are up almost 3 per cent so far this week, Bloomberg reported. Raw sugar has surged about 30 per cent this year as the global outlook shifts from a surplus to a shortage in the 2026-27 season, with the International Sugar Organization forecasting a global deficit of about 260,000 tons in the coming season.

India's import push


India, typically among the world's largest sugar exporters and its second-biggest producer, opened a tax-free import quota of 1 million metric tons in August after domestic prices rose to a record high, marking a rare step for the country.

Also read: Govt asks sugar mills to ensure adequate supplies during festivals, keep prices 'reasonable'

Indian mills have since sought approvals to bring in almost 800,000 tons of raw sugar, or about 80 per cent of the total quota, Ashwini Srivastava, joint secretary for sugar in the food ministry, said at the India Sugar & Bio-Energy Conference in New Delhi.

Refiners have also sought permission to sell domestically another 265,000 tons that was previously intended for re-export, he said. India is importing sugar from Brazil for the first time in nearly a decade, Reuters reported.

Government warns against hoarding

Speaking separately on Thursday, Srivastava said the government had asked sugar mills to ensure adequate supplies during the festival season and sell the sweetener at reasonable prices, warning that corrective measures would follow if needed, Reuters reported. He said last month's price surge was driven not by a spurt in demand but by hoarding in anticipation of further price increases during the festival period. "It is the collective responsibility of the entire sector to ensure that prices remain stable. There is no justification for any price rise during festivals," he said.

Sugar demand in India typically rises between August and November during major festivals such as Ganesh Chaturthi, Dussehra and Diwali, when consumption of traditional sweets and confectionery increases. Prices have eased in recent days after hitting a record high last month but remain nearly 20 per cent higher than two months ago, according to Reuters. Srivastava said the government would track sugar production on a monthly basis to improve policymaking aimed at keeping prices in check, adding that mills had been asked to provide accurate monthly production and sales data.

Also read: Sugar imports lose appeal as domestic prices plunge below import parity

On the supply side, concerns have intensified over a strengthening El Niño, which is expected to weigh on harvests across Asia and has been linked to dryness in India. Rainfall during the country's monsoon season, which ends this month and which the sugarcane crop depends on, is running about 15 per cent below normal levels as of September 9, Bloomberg reported.

In Brazil, heavy rains in the Center-South region are disrupting crushing, with more rain forecast across key producing areas in São Paulo state, StoneX analyst Rafael Crestana said in a note cited by Bloomberg. Surging oil prices are also lending support to sugar, as they could incentivise mills to divert more cane towards ethanol production, limiting output of the sweetener.

(With inputs from Bloomberg and Reuters)