India may halt sugar exports for years due to El Niño and rising ethanol demand

India, once the world’s second-largest sugar exporter, could largely exit global sugar markets for at least three seasons. The main drivers are the El Niño weather pattern, which threatens weaker monsoon rains, and rapidly rising domestic ethanol demand that is tightening sugar availability.

According to traders and industry experts, the reduction in India’s export surplus could remove millions of tonnes of sugar from the global market. This is expected to intensify competition among importers in Asia, Africa, and the Middle East and provide support to benchmark prices in London and New York.

Analysts say India’s prolonged absence would significantly reshape global trade flows, especially as other major producers such as Brazil are also diverting more sugarcane toward ethanol production.

Weather conditions are further worsening the outlook. Monsoon rainfall in India is forecast to fall to its lowest level in 11 years, prompting farmers to delay planting or switch to less water-intensive crops such as soybeans and pulses.

In the MY 2026/27, India’s sugar production is expected to fall below domestic consumption. This would reduce inventories to multi-decade lows, further limiting export potential and potentially even creating import needs in the coming years.

At the same time, the Indian government is actively promoting higher ethanol blending in fuel, strengthening a long-term shift in which domestic demand for sugarcane grows faster than supply. This structural change is expected to keep export availability constrained for years.

Tags: India, biofuel, sugar