India Mulls Sugarcane Curbs to Stabilize Record-High Sugar Prices

India's government is considering restricting the amount of sugarcane used for ethanol production to boost sugar output and calm record-high prices. Reduced rainfall in Maharashtra and Karnataka, the country's biggest sugarcane-producing states, has raised concerns about next year's sugar output.

The current season's diversion of around 10% of total output (3 million metric tons) from sugar to ethanol could add a similar volume to domestic sugar supplies, offsetting the expected drop in output due to weak rains. Indian sugar prices have risen about 10% over the last month to a record high.

To keep its program of blending 20% ethanol into petrol on track, the government would need to increase the use of corn and rice for ethanol production. Corn and rice stocks are ample.

The proposed restrictions under consideration would ask mills to stop producing ethanol from sugarcane juice and B-heavy molasses, a byproduct with a relatively high sugar content. Instead, they would be allowed to produce ethanol mainly from C-heavy molasses, a byproduct left after most of the sugar has been extracted.