Global Sugar Prices Fall Sharply on Brazil Surplus; India Sector Outlook Stable: ICRA

Global sugar prices have declined sharply due to surplus production from Brazil, although the outlook for the Indian sugar sector remains stable, according to a report by ICRA Limited.

Global prices decline amid Brazil surplus

International sugar prices have remained under pressure in the current sugar season (SY2026) as global supply continues to outpace demand. The decline has been largely attributed to higher production in Brazil, the world’s largest sugar producer and exporter.

According to ICRA, global sugar production for SY2025–SY2026 is estimated at around 189.3 million metric tonnes, about 5% higher than the previous year. Meanwhile, global consumption is projected at 178.1 million metric tonnes, representing a modest 1% year-on-year increase, creating a surplus in the international market.

Reflecting this oversupply, raw sugar prices fell sharply to $313 per metric tonne in February 2026, compared with $445 per metric tonne in February 2025. Similarly, white sugar prices declined to $408 per metric tonne, down from $532 per metric tonne during the same period.

The premium between white and raw sugar stood at $95 per metric tonne in February 2026, slightly higher than $87 per metric tonne in February 2025.

India demand–supply scenario comfortable

Despite volatility in global markets, the domestic demand–supply balance in India remains comfortable. As per the third advance estimates of the Indian Sugar Mills Association, gross sugar production in SY2026 is expected to increase by 9.4% to 32.41 million metric tonnes, compared with 29.6 million metric tonnes in the previous year.

After diverting around 3.1 million metric tonnes of sugar towards ethanol production, net sugar production is estimated at 29.3 million metric tonnes.

With domestic consumption projected at 28.3 million metric tonnes and exports estimated at about 0.7 million metric tonnes, the closing stock is expected to reach around 5.6 million metric tonnes, equivalent to nearly two months of domestic consumption, ensuring adequate supply in the market.

Revenue growth moderate; margins likely stable

ICRA expects the operating margins of integrated sugar mills in its sample set to remain range-bound at around 10–10.5% in FY2026, compared with 9.6% in the previous year.

Profitability of sugar mills is likely to be supported by improved sugarcane availability, stable domestic sugar prices and steady performance of the distillery segment.

Revenue growth for integrated sugar mills is projected to remain moderate at around 5–8% in FY2026, driven mainly by higher cane availability and stable sugar prices.

However, margins may remain broadly stable as sugarcane procurement costs have increased while ethanol prices have largely remained stagnant, limiting further margin expansion.

Ethanol blending progress and cane pricing

India continues to make progress in its ethanol blending programme. During the first three months of Ethanol Supply Year (ESY) 2026, the country achieved a blending ratio of 19.98%, with 239 crore litres of ethanol blended, including 59.2 crore litres in January 2026.

For the 2026 sugar season, the government has increased the Fair and Remunerative Price (FRP) for sugarcane by ₹15 to ₹355 per quintal for a basic recovery rate of 10.25%.

In Uttar Pradesh, the State Advised Price (SAP) for sugarcane has been raised to ₹400 per quintal for early-maturing varieties and ₹390 per quintal for normal varieties.

ICRA also noted that borrowings of the integrated sugar mills in its sample set are expected to moderate in FY2026, supported by profit accretion and repayment of distillery loans. This is likely to keep the capital structure comfortable and improve coverage metrics for the sector.

Overall, while global sugar prices remain under pressure due to surplus supply, the Indian sugar industry is expected to maintain stable financial performance supported by a balanced domestic market and ethanol blending demand.