How El Nino May Make India's Sugar Less Sweet and More Expensive This Year

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.

"El Nino is firmly established and strengthening rapidly. WMO forecasts indicate a near-100 per cent likelihood that it will persist through February 2027, potentially being one of the strongest since at least 1950," Celeste Saulo, Secretary-General of the WMO, said. 

The weather phenomenon is also expected to put sugar mills under pressure. According to the WMO, 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. 

 Sugar Prices Skyrocket

The warning comes at a time when sugar prices are already hovering at elevated levels. 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.
 

Sugar Price Trend
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Why Are Sugar Prices Rising?

The government has attributed the recent spike in sugar prices to a combination of domestic and global factors. Production has come in lower than expected due to adverse weather conditions that damaged sugarcane crops in key growing regions. 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.
 

Why Sugar Prices Are Rising
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Importance Of Sugar Industry In India

Any prolonged stress on the sugar sector could have far-reaching consequences. Beyond being a major agricultural commodity, sugarcane supports the livelihoods of nearly five crore farmers and sustains around five lakh jobs in sugar mills and allied industries. A weak crop therefore affects not only sugar availability and prices but also rural incomes, mill operations and the broader agricultural economy.

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. 

Why Sugar Matters to India
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While India is not facing an immediate sugar shortage and existing stocks are expected to meet domestic demand, the coming months will be crucial. If El Nino strengthens further and dry conditions persist, lower cane yields and reduced sugar recovery could tighten supplies even more. 

The 2026-27 season may ultimately determine whether the current price spike proves temporary or marks the beginning of a more prolonged period of stress for India's sugar sector.