India Eyes Sugarcane Restrictions to Tame Record-High Sugar Prices

India is considering restricting the use of sugarcane for ethanol production to boost sugar output and calm record-high prices. According to government and industry sources, about 3 million metric tons of sugar, or around 10% of total output, was diverted to ethanol production during the current year to the end of September.

The restriction is aimed at offsetting the expected drop in sugar output due to weak rains in Maharashtra and Karnataka, India's biggest sugarcane-producing states. Indian sugar prices have risen about 10% over the last month to a record high, and are expected to remain high for at least the next three months.

The government would need to increase the use of corn and rice for ethanol production to offset the reduced amount from sugarcane. Mills would be asked to stop producing ethanol from sugarcane juice and B-heavy molasses, and instead produce it mainly from C-heavy molasses.