Global Sugar Market Update – Week of March 9, 2025

This week’s update focuses on India’s surplus-driven strategy, shifting production dynamics in Maharashtra, and global pricing pressures amidst rising competition.

Key Themes Discussed:

India’s Sugar Surplus Strategy
Despite a forecasted 15% decline in sugar production for the 2024–25 marketing year, India enters the new season with strong starting stocks of 8 million tons, ensuring a total availability of 35.2 million tons.
This stockpile comfortably exceeds domestic consumption (~28 million tons), allowing India to stabilize its domestic market while permitting controlled exports up to 1 million tons.
Already, between 600,000 to 700,000 tons have been exported or contracted, reflecting proactive management by the government and sugar industry.

Maharashtra’s Production Decline
Maharashtra, a key sugar-producing state, experienced a significant drop to 6.11 lakh tons compared to 9.518 lakh tons the previous season.
The decline stems from:

• Delayed crushing season start
• Diversion of cane for alternative uses
• Lower cane yields
   Combined with stagnant mill sugar prices (ranging Rs. 3,800 to Rs. 4,050 per quintal) and rising fair remunerative prices, the industry faces severe profitability pressures.

Shift Toward Ethanol Production
In response to surplus sugar and revenue pressures, India is accelerating its strategic shift toward ethanol production.
This move addresses two major goals:

• Reducing excess sugar inventory
• Supporting renewable energy initiatives
   This pivot is strongly backed by the Indian Sugar Mills Association and government policy frameworks.

Global Market Dynamics:

Brazil’s Record Production Outlook
Brazil, despite weather-related challenges, anticipates record sugar production for 2025–26 as mills prioritize sugar profitability over ethanol.
Given Brazil’s dominance, its output trends will heavily influence global sugar pricing and India's export strategies.

Downward Pressure on Global Prices
Global sugar prices are experiencing a downward trend due to:

• Falling global oil prices impacting ethanol demand
• Record sugar deliveries from major producers
• Changing investor sentiment amid increased output forecasts
   Producers like Thailand, projecting higher output, are intensifying global competition, making strategic positioning crucial for exporters like India.

Strategic Implications:

• India’s Policy Flexibility: Controlled export permissions are vital for balancing domestic surplus and maintaining price stability.
• Pressure on Profit Margins: Rising input costs and flat domestic sugar prices are constraining industry margins.
• Global Competitiveness Challenges: Increased production in Thailand and Brazil could further weigh on international prices, forcing Indian mills to sharpen export strategies.

Listen to this episode for:

• India’s sugar surplus management strategy
• Maharashtra’s regional challenges and ethanol pivot
• Global production trends and their influence on pricing
• Strategic considerations for Indian sugar exports in a competitive environment