India Set for Record Sugar Production in 2025/26, Poised to Reenter Global Markets

India is poised to produce a record quantity of sugar in the 2025/26 marketing year, starting Oct-25, following a significant expansion of sugarcane cultivation. This comes as farmers respond to a combination of favorable water availability and declining profitability of competing crops. After two years of constrained exports due to reduced yields from drought conditions, this rebound could allow India, the world's second-largest sugar producer, to resume sugar exports at competitive levels.

Favorable Conditions Driving Sugarcane Cultivation

Maharashtra and Karnataka, the two states contributing nearly half of India’s sugar production, are reporting significantly higher water reservoir levels compared to the previous year. Government data reveals that these regions experienced rainfall levels up to 39% above average during this year’s monsoon season. Ample water availability is a critical factor for a water-intensive crop like sugarcane, enabling farmers to confidently expand their planting areas.

This renewed focus on sugarcane cultivation also stems from economic challenges associated with other crops. Many farmers had shifted to soybeans and cotton in recent years due to water scarcity but faced poor returns. The consistent and relatively assured income from sugarcane has drawn farmers back.

Expected Impact on Global Sugar Markets

The increased cane planting is expected to enable India to export between 3 million and 5 million tons of sugar in the upcoming season, contingent upon favorable weather conditions and minimal pest infestations. As a result, India is likely to reenter the global market as a significant exporter after a two-year hiatus. This additional supply could put downward pressure on global sugar prices, which have been elevated due to supply challenges from Brazil, the world's top sugar producer.

Figure 1. Indian Sugar Exports

Brazil's sugar exports have been impacted by prolonged dry conditions, limiting its production and shipments. With India resuming exports, the global market could experience increased stability, alleviating concerns about supply shortages. Traders anticipate that India’s exports could serve as a counterbalance to supply deficits from Brazil and other producing nations.

Key Markets and Export Potential

India has a history of strong performance in sugar exports. During the five years leading up to 2022/23, India was the second-largest global exporter, with annual export volumes averaging 6.8 million tons. Its primary export destinations include Indonesia, Bangladesh, and the United Arab Emirates. For the 2025/26 season, industry analysts believe India could regain significant market share. According to commodities research firm Phillip Capital India, increased cane planting will enable India to export, provided the weather remains favorable and there are no major pest infestations.

Balancing Act for Domestic and Global Markets

While the prospect of increased sugar exports is promising, India must also balance its domestic and international market needs. Exports provide vital economic benefits but can affect local sugar prices and availability if not carefully managed. The Indian Government’s policy decisions regarding export limits and subsidies will play a crucial role in determining how much sugar is allocated to the international market.

Conclusion

India's sugar production recovery highlights the resilience of its agricultural sector and its ability to adapt to changing circumstances. The return of ample water supply, coupled with farmers' renewed confidence in sugarcane, is expected to make India a key player in the global sugar market once again. If these projections hold, India’s exports could provide much-needed relief to the global market while reinforcing its position as a reliable supplier.