A Comparative Analysis of India’s Major Producing States

Sugar Season 2025-26

As the 2025-26 crushing season enters its final phase, a clear divergence has emerged between India’s top three sugar-producing states. While production volumes have rebounded from last year’s lows, the industry is grappling with a massive ethanol surplus and a “liquidity trap” driven by low byproduct prices.

State-by-State Performance & Ethanol Dynamics

The following analysis highlights the production metrics and the critical ethanol allotment crisis facing the “Big Three.”

1. Maharashtra: The Rebound vs. Yield Constraints
   Maharashtra has reclaimed its top-producer status but is falling short of initial “bumper” projections.

• Production: As of February 22, 2026, 210 mills (160 still active) have crushed 99 MMT of cane to produce 9.3 MMT of sugar.
• The Yield Hit: Final crushing is expected to land between 102.5–105 MMT, lower than the projected 115 MMT. This is due to excess rains, early flowering, and significant cane diversion to Jaggery/Khandsari units.
• Ethanol Crisis: The state offered 267.43 Cr Ltr but OMCs allotted only 145.27 Cr Ltr (54%). With tanks full and limited demand, ethanol prices have crashed to ₹51–52/Ltr, with Extra Neutral Alcohol (ENA) hovering around ₹55/Ltr.

1. Uttar Pradesh: The Model of Stability
   UP remains the most balanced state this season, maintaining steady sugar prices and high ethanol allotment.

• Production: As of February 14, 2026, 120 mills (111 still active) have crushed 66.26 MMT of cane, producing 6.56 MMT of sugar with a superior recovery rate of 9.90%.
• Ethanol Efficiency: UP mills are best-placed nationally. Of the 60.99 Cr Ltr sugarcane-based ethanol offered, OMCs allotted 98.96%.
• Market Health: Sugar prices remain steady at ₹39–40/kg, though mills are currently struggling to sell excess molasses, pushing molasses rates downward.

1. Karnataka: The Ethanol Victim
   While Karnataka’s crushing season is largely over, it is the state most adversely affected by the ethanol supply-demand disparity.

• Production: 81 mills crushed 52.5 MMT of cane, producing 4.5 MMT of sugar at an 8.55% recovery rate.
• The Surplus Problem: The state has a massive 191 Cr Ltr ethanol surplus. OMCs allotted only 41% of the total offer.
• Price Collapse: Because Karnataka mills focused heavily on Cane Juice ethanol (neglecting C-Heavy molasses), the surplus has forced them to produce ENA. This has tanked ENA prices from ₹66/Ltr (Oct 2025) to below ₹60/Ltr today.
  Comparative Data Summary: Sugar vs. Ethanol Allotment

Maharashtra: The Volume Leader

• Cane Crushing: As of late February 2026, the state has processed 99.00 MMT of sugarcane.
• Sugar Output: Total production stands at 9.30 MMT.
• Recovery Efficiency: The state is achieving a sugar recovery rate of 9.39%.
• Ethanol Allotment: In terms of policy support, OMCs have allotted 57.36% of the sugarcane-based ethanol offered by the state’s mills.
  Uttar Pradesh: The Efficiency Leader
• Cane Crushing: The state has processed 66.26 MMT of sugarcane as of mid-February.
• Sugar Output: Total production currently sits at 6.56 MMT.
• Recovery Efficiency: Uttar Pradesh leads the major states with a superior sugar recovery rate of 9.90%.
• Ethanol Allotment: UP is the most successful in terms of policy integration, with OMCs allotting a nearly perfect 98.96% of the sugarcane-based ethanol offered.
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  Karnataka: The Balanced Crusher
• Cane Crushing: The state has crushed 52.50 MMT of sugarcane, with most mills now having concluded their primary season.
• Sugar Output: Total sugar production reached 4.50 MMT.
• Recovery Efficiency: The state recorded a sugar recovery rate of 8.55%.
• Ethanol Allotment: Karnataka is currently the most challenged in this sector, with OMCs allotting only 52.00% of the sugarcane-based ethanol offered, leading to a significant local surplus.

The “Liquidity Trap” of February 2026

The core challenge for February 2026 is not production, but cash flow.

• Full Tanks, Empty Pockets: In Maharashtra and Karnataka, ethanol storage tanks are full due to low upliftment by OMCs. This prevents mills from generating the cash needed to pay the Fair and Remunerative Price (FRP) to farmers.
• Byproduct Devaluation: The glut has pushed open-market ethanol rates below ₹52/Ltr, a level that makes many distillery operations unprofitable given the current high cost of cane.
  Outlook
  While Uttar Pradesh shows that a balanced “B-Heavy molasses” route can maintain stability, the Western states (Maharashtra and Karnataka) are facing a structural crisis. Without an urgent increase in ethanol upliftment or an MSP hike for sugar, the 2025-26 recovery will be overshadowed by mounting farmer arrears.