An intensifying El Nino, coupled with drought conditions in Maharashtra, one of India’s largest sugarcane-producing states, is raising concerns over the country’s sugar output this year. The outlook for sugarcane production has turned increasingly grim, with the World Meteorological Organization warning that a severe rainfall deficit in 2026 could reduce sucrose content in cane, shrink the effective harvesting area and lower overall production.
The weather phenomenon is also expected to put sugar mills under pressure. The warning comes at a time when sugar prices are already hovering at elevated levels. The government has attributed the recent spike in sugar prices to a combination of domestic and global factors. At the same time, demand has strengthened with the onset of the festive season, while tightening global supplies have pushed international sugar prices higher. Authorities have also flagged speculation and hoarding by some sections of the trade as contributors to the recent surge in retail prices. The implications extend beyond food and farming. The sugar industry has become an important pillar of India’s ethanol blending programme, with a portion of sugar output being diverted for ethanol production each year.
Production has come in lower than expected due to adverse weather conditions that damaged sugarcane crops in key growing regions. Growing water shortages and drought-like conditions could complicate milling operations in early 2027, adding to the impact of lower cane yields and reduced sugar recovery rates, according to the WMO. Retail sugar prices stood at Rs 42.18 per kg on October 8, 2021, and remained largely stable over the following years, reaching Rs 46.49 per kg on October 8, 2025. However, prices have surged 18.8 per cent over the past year to Rs 55.21 per kg on October 8, 2026, according to data from the Department of Consumer Affairs.
