A Conversation with Kiran Wadhwana
Kiran Wadhwana has been a good friend throughout my career in sugar. He has experienced 41 Indian crop seasons and worked in farming, milling, trading, and exports. I wanted to talk with Kiran about the Indian crop and ask whether the Iranian situation was affecting the sector.
“We started the year with about 5 million tonnes of opening stocks and expect to produce around 28.5 million tonnes,” Kiran tells me. Based on that production, he anticipates 2.5–3 million tonnes of sugar will be converted into ethanol, domestic sugar consumption to be “close to last year’s 28.1 million tonnes,” and exports between 500,000 and 700,000 tonnes. “That implies closing stocks slightly above 4.5 million tonnes,” he says.
On paper, those figures indicate “a steady, almost uneventful market.” In reality, the balance sheet is so tight that any policy shock or logistical disruption can swiftly turn India from a surplus to a deficit. If weather conditions or water allocations reduce cane in Maharashtra or Karnataka, or if more cane is diverted to ethanol, the scope for comfortable exports will diminish.
Cane is no longer automatically the most attractive crop, Kiran continues. “It must compete with grains that offer 3–4-month rotations and quicker cash flow. With the government consistently increasing support prices for other crops, a farmer who can undertake two or three grain rotations may earn as much or more than he would from cane.”
Kiran explains that India’s ethanol programme “adds another layer of complexity—and opportunity.”
Mills and distilleries can produce ethanol from three cane‑based routes—juice, B‑heavy molasses, and C‑molasses—and from grain, mainly corn and broken rice.
Today, we have six different prices for ethanol,” Kiran notes. “We’re probably the only country in the world where you have different prices for ethanol depending on whether you produce it from corn, cane, juice, or molasses.”
At the blending level, “India already has a 20 per cent blend. We don’t have any flex-fuel cars, and standards for 22, 25, and 27 per cent blends are still being finalised.” Widespread adoption of flex-fuel vehicles would require “a clear price advantage at the pump—if a buyer has to buy ethanol at the same price as petrol, then why should he bother?”
Looking ahead, Kiran says, “You might find a situation where the government wants to increase ethanol production. It’ll turn around and set a high price for ethanol, and say, okay, this is the final price for any ethanol, no matter where you produce it from.” That would link ethanol prices more explicitly to crude oil and make the fuel programme more vulnerable to global energy shocks.
Talking about global energy shocks,” I inquire, “how is the war in Iran impacting the situation, particularly exports?”
“India’s exports account for less than two per cent of the world’s sugar trade,” Kiran replies, yet “its impact on world prices is outsized because India’s exports are unpredictable. Brazil and Thailand hedge and sell forward; the market knows what’s coming. In India, we often do not know until days before whether the government will grant export quotas or prioritise ethanol and domestic supply.”
Even in a typical year, “when a 2–3‑million‑tonne export quota is suddenly announced and shipped over a few months into a market that is only marginally in surplus, it can depress futures prices. When traders have been expecting exports, and they do not materialise, prices can rally sharply.”
“What is the current situation?” I ask. “Is the domestic price in India above the world sugar price?”
“India’s LQWs (Low Quality Whites) can sell at about $440 to $445 per tonne FOB,” Kiran tells me.
Exports made little sense last month as London futures were trading at $400 to $410 per tonne,” Kiran continues. “But the world price for whites has started rising because Middle Eastern refineries will not be able to deliver. With London back up to $450 per tonne, exports are beginning to look viable. The rupee has also weakened, so we can start closing at $440 per tonne. Our domestic price remains weak. March is the year-end, and mills don’t want to hold stocks; they prefer to sell.
Source: Barchart
“I don’t think the Iranian situation will impact our exports,” Kiran continues. “It is curtailing the flow to Jebel Ali, the sugar that then moves on to Iran and into Afghanistan. That’s not happening, but Sri Lanka has opened up. The Iranian situation has made sugar from Brazil or the EU to Sri Lanka more expensive due to rising freight rates, and Indian sugar is now competitive. The same applies to East Africa.
“We don’t have a large amount of sugar to export,” Kiran adds. “We’ve exported 310,000 tonnes so far, by the end of February or early March, and I believe we’ll finish at around 600,000 tonnes. So, bits and pieces, because Sri Lanka needs about 40-50,000 every month, which they’ll probably buy from India.”
Bangladesh currently does not import sugar from India due to the political situation between the two countries. “Their refineries import Brazilian raws,” Kiran tells me. “Brazilian ships will go to Bangladesh. I think that’s not going to be an issue.”
In the long term, the Iranian war could alter the type of sugar that Indian mills produce. “Many mills in the north have shifted to producing refined sugar rather than LQWs,” Kiran notes. “We probably have more than 50 or 60 mills that can produce refined sugar now.”
There are two reasons for this. First, “as more food processing industries develop in India, a market is emerging that offers a slightly better premium.” Second, and more surprisingly, the cost calculation has reversed.
Today, if you take cane and produce refined sugar, the operating costs are cheaper than producing non‑refined sugar, which was not the case a few years ago. This is mainly because the price of sulphur has skyrocketed. You use sulphur to make non-refined sugar.
With sulphur expensive and sometimes difficult to obtain, mills find that “producing refined sugar from cane is cheaper than producing Low-Quality Whites (LQWs), in terms of chemicals and recoveries.” Kiran estimates that “out of the 28 million plus we produce, maybe 7 million is refined sugar,” and expects that “within the next 2 or 3 years, you’ll see almost 10 million tonne will be refined.”
This is an AI-generated chart. I cannot guarantee its accuracy and include it only for illustration purposes.
If sulphur and related inputs rise alongside oil, the incentive to shift further into refined whites increases, but so do the absolute production costs. For exporters, this means higher minimum prices to cover costs, just as freight and insurance to key Middle Eastern buyers are becoming more expensive.
Domestically, mills are unable to pass these cost increases on. “The government technically controls everything,” Kiran says, “from the cane price to the sugar price, to the amount of sugar you can sell, the amount you can export. Everything is pretty much controlled.”
The main issue is that India is “the only country in the world where there is no linkage between sugar and sugarcane prices.” When cane prices are raised, but sugar prices are not, “mills struggle to pay farmers on time, and cane arrears increase.”
Kiran also wonders whether higher oil prices will prompt the Indian government to speed up the country’s domestic ethanol programme, increasing the 20 per cent blend more quickly than planned or modifying the current multi-tiered pricing structure that depends on the feedstock.
“Probably next year, we’ll increase the blend to 22 per cent,” he tells me. ‘Then, in a couple of years, we’ll do 25 per cent, and by 2030, we’ll do 27 per cent. I think that’s the roadmap we’re looking at in India.”
Kiran concludes that in a year where “we started with about 5 million tonnes of opening stocks” and expect 28.5 million tonnes of production, with 2.5–3 million tonnes going to ethanol and closing stocks “slightly above 4.5 million tonnes,” there is little slack in the system if either policy or geopolitics go wrong.
© Commodity Conversations® 2026