India sugar prices climb as El Niño cuts cane output

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India sugar prices climb

Highlights

India's sugarcane yield is down by 9 million tonnes year-on-year in 2025 due to El Niño-induced drought and elevated fertiliser costs.
Sugar prices in India surged over 30 per cent in August from July, prompting $50 million in state support, $1.70/tonne payments, lifted tariffs, and a 1 million tonne duty-free import allowance.
Tighter sugar supply and higher costs are raising chocolate and confectionery prices, with local businesses increasing prices for products like sugarcane juice from 10 to 25 rupees per cup.

Crop stress and supply measures in India

As reported by ABC News, citing the United Nations Food and Agriculture Organization, global sugar prices rose 6.6 per cent in October, the fourth straight monthly increase and the highest level since April last year. In India, the weather-driven supply strain adds to domestic cost pressures after a super El Niño weakens monsoon rainfall and leaves cane crops short of moisture during key growing months.

Farmers in southern India say the dry conditions are reducing cane quality and yield, while fertiliser costs remain elevated because of global conflicts. Kurubar Shanta Kumar, president of the Karnataka State Sugarcane Growers Association, says sugarcane yield so far this year is down by 9 million tonnes from a year earlier, adding to pressure on an industry already hit by excess rain, pests and crop disease in 2025.

India's Department of Consumer Affairs says prices increased by more than 30 per cent in August from July. Karnataka's state government is providing about $50 million in financial support to farmers and an extra $1.70 for every tonne of sugarcane supplied to mills, while the federal government has lifted sugar tariffs to allow up to 1 million tonnes of duty-free imports until the end of the year and has also barred sugar from ethanol production.

Retail impact and broader market effects

Higher sugar costs are beginning to feed through to small businesses and confectionery makers. Analysis by ANZ Bank says tighter sugar supply, alongside higher cocoa prices, is raising manufacturing costs for chocolate and lollies and could push up retail prices.

In Mysuru, some traders are already charging more to protect margins. A sugarcane juice seller says his cup price has risen to 25 rupees from about 10 rupees last year, while a sweet shop owner says she is trying to absorb the higher cost for now to avoid losing customers, but may have to raise prices if conditions persist.

Australia's sugar sector appears less exposed to the current dry spell than India's. A U.S. Department of Agriculture report says Australian growers have been far less affected by dry conditions and may even benefit from cane with higher sugar content, potentially lifting output, even as the World Meteorological Organization warns El Niño is likely to persist until at least February 2027 and keep weather risks elevated.

Earlier, we discussed India’s widening September trade deficit as imports rose faster than exports amid higher crude costs.

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