International sugar prices in SY2026 have remained lower than the current cost of sugar production and prevailing domestic prices, mainly due to surplus sugar supply from Brazil. Global sugar production for SY2025–SY2026 is estimated at 189.3 million metric tonnes, about 5% higher than the previous year, while consumption is expected at 178.1 million metric tonnes, around 1% higher year-on-year.
Reflecting the surplus supply, international prices have declined sharply. Raw sugar prices fell to $313 per metric tonne in February 2026 from $445 per metric tonne in February 2025, while white sugar prices declined to $408 per metric tonne 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, compared with $87 per metric tonne in February 2025.
Despite global price volatility, the domestic demand–supply scenario remains comfortable. As per the third advance estimates of the Indian Sugar Mills Association, gross sugar production in SY2026 is projected to increase by 9.4% to 32.41 million metric tonnes, compared with 29.6 million metric tonnes in the previous year.
After an estimated diversion of 3.1 million metric tonnes towards ethanol production, net sugar production is likely to remain at 29.3 million metric tonnes. Considering domestic consumption of 28.3 million metric tonnes and exports of 0.7 million metric tonnes, the closing sugar stock is expected to reach 5.6 million metric tonnes, equivalent to about two months of consumption.
ICRA expects the operating margins of its sample set of integrated sugar mills to remain range-bound at around 10–10.5% in FY2026, compared with 9.6% in the previous year. Profitability is supported by improved cane availability, firm domestic sugar prices and comfortable performance of the distillery segment.
Revenue growth for integrated sugar mills is projected to remain moderate at 5–8% in FY2026, supported by higher cane availability and stable sugar prices. However, margins are likely to remain broadly stable as cane prices have increased while ethanol prices have remained largely stagnant.India continues to progress on ethanol blending, achieving a blending ratio of 19.98% during the first three months of ESY2026, with 239 crore litres blended, including 59.2 crore litres in January 2026.
For SY2026, the Fair and Remunerative Price (FRP) for sugarcane has been increased by ?15 to ?355 per quintal for a basic recovery rate of 10.25%. In Uttar Pradesh, the State Advised Price (SAP) has been raised to ?400 per quintal for early-maturing varieties and ?390 per quintal for normal varieties.
ICRA also noted that borrowings of its sample set are likely to moderate in FY2026, supported by profit accretion and repayment of distillery loans, which is expected to keep the capital structure comfortable and improve coverage metrics.