India's Sugar Market on Brink of Disaster as Low Inventories and Weather Risks Loom

India's sugar market is facing an unprecedented challenge as low inventories and weather risks threaten to disrupt supply. According to DAM Capital Advisors, India may start the 2026-27 sugar season with just 3 million tonnes of inventory, enough for only about 35 days of consumption.

This would be the lowest opening stock in a decade, leaving little room for error. DAM Capital estimates that the country could produce around 29 million tonnes of sugar in the 2026-27 season, but warns that deficient rainfall and an early start to crushing could weaken the final output picture.

The sugar market is closely tied to India's ethanol programme, which uses sugarcane juice and B-heavy molasses as feedstocks. A prolonged sugar deficit would force trade-offs across several parts of the agricultural economy at once.

DAM Capital expects global raw sugar prices to remain firm due to Brazil's production choices, with Brazilian mills potentially diverting more sugarcane towards ethanol production if elevated crude oil prices improve the economics of producing fuel rather than sugar.