350,000 tonnes sugar diverted to domestic market to tame prices

Indian refiners will divert 350,000 tonnes of sugar originally meant for export to the domestic market within a week, after the government cleared the move to ease a supply crunch. The diverted stock is enough to meet demand for nearly five days in the world's most populous country, people familiar with the matter said. The release aims to stabilise prices that surged to a record high last week, ahead of the festival season from late August through January.

Domestic sugar prices have already started softening after the government allowed duty-free imports of 1 million tonnes of raw sugar and tightened stock-holding limits on bulk buyers. Spot prices of medium-grade sugar in Kolhapur fell 12.6 percent to around ₹5,550 per quintal between August 21 and 25, although Muzaffarnagar prices stayed steady at ₹5,800. Some traders said any dip below ₹5,000 could hurt millers, especially if it persists into the next crushing season starting late October.

The diverted stocks provide near-term relief without the need for immediate imports, the sources said, though inbound shipments will still be required later, particularly from Brazil. Duty-free sugar imports may total between 300,000 and 600,000 tonnes by end-October, below the 1-million-tonne quota, as softer domestic prices reduce the incentive for millers to import more.