![\"\"](\"https:\/\/i0.wp.com\/commodityconversations.com\/wordpress2\/wp-content\/uploads\/2026\/03\/Kiran-Wadhwna-1.png?resize=243%2C300&ssl=1\")
<\/p>\n<\/p>\n
A Conversation with Kiran Wadhwana<\/strong><\/p>\n 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.<\/p>\n \u201cWe started the year with about 5 million tonnes of opening stocks and expect to produce around 28.5 million tonnes,\u201d Kiran tells me. Based on that production, he anticipates 2.5\u20133 million tonnes of sugar will be converted into ethanol, domestic sugar consumption to be \u201cclose to last year\u2019s 28.1 million tonnes,\u201d and exports between 500,000 and 700,000 tonnes. \u201cThat implies closing stocks slightly above 4.5 million tonnes,\u201d he says.<\/p>\n On paper, those figures indicate \u201ca steady, almost uneventful market.\u201d 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.<\/p>\n Cane is no longer automatically the most attractive crop, Kiran continues. \u201cIt must compete with grains that offer 3\u20134-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.\u201d<\/p>\n Kiran explains that India\u2019s ethanol programme \u201cadds another layer of complexity\u2014and opportunity.\u201d<\/p>\n Mills and distilleries can produce ethanol from three cane\u2011based routes\u2014juice, B\u2011heavy molasses, and C\u2011molasses\u2014and from grain, mainly corn and broken rice.<\/p>\n Today, we have six different prices for ethanol,\u201d Kiran notes. \u201cWe\u2019re 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.\u201d<\/p>\n At the blending level, \u201cIndia already has a 20 per cent blend. We don\u2019t have any flex-fuel cars, and standards for 22, 25, and 27 per cent blends are still being finalised.\u201d Widespread adoption of flex-fuel vehicles would require \u201ca clear price advantage at the pump\u2014if a buyer has to buy ethanol at the same price as petrol, then why should he bother?\u201d<\/p>\n Looking ahead, Kiran says, \u201cYou might find a situation where the government wants to increase ethanol production. It\u2019ll 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.\u201d That would link ethanol prices more explicitly to crude oil and make the fuel programme more vulnerable to global energy shocks.<\/p>\n Talking about global energy shocks,\u201d I inquire, \u201chow is the war in Iran impacting the situation, particularly exports?\u201d<\/p>\n \u201cIndia\u2019s exports account for less than two per cent of the world\u2019s sugar trade,\u201d Kiran replies, yet \u201cits impact on world prices is outsized because India\u2019s exports are unpredictable. Brazil and Thailand hedge and sell forward; the market knows what\u2019s coming. In India, we often do not know until days before whether the government will grant export quotas or prioritise ethanol and domestic supply.\u201d<\/p>\n Even in a typical year, \u201cwhen a 2\u20133\u2011million\u2011tonne 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.\u201d<\/p>\n \u201cWhat is the current situation?\u201d I ask. \u201cIs the domestic price in India above the world sugar price?\u201d<\/p>\n \u201cIndia\u2019s LQWs (Low Quality Whites) can sell at about $440 to $445 per tonne FOB,” Kiran tells me.<\/p>\n Exports made little sense last month as London futures were trading at $400 to $410 per tonne,” Kiran continues. \u201cBut 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.<\/p>\n Source: Barchart<\/p>\n \u201cI don\u2019t think the Iranian situation will impact our exports,\u201d Kiran continues. \u201cIt 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.<\/p>\n \u201cWe don’t have a large amount of sugar to export,\u201d Kiran adds. \u201cWe’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\u2019ll probably buy from India.\u201d<\/p>\n Bangladesh currently does not import sugar from India due to the political situation between the two countries. \u201cTheir refineries import Brazilian raws,\u201d Kiran tells me. \u201cBrazilian ships will go to Bangladesh. I think that’s not going to be an issue.\u201d<\/p>\n In the long term, the Iranian war could alter the type of sugar that Indian mills produce. \u201cMany mills in the north have shifted to producing refined sugar rather than LQWs,\u201d Kiran notes. \u201cWe probably have more than 50 or 60 mills that can produce refined sugar now.\u201d<\/p>\n There are two reasons for this. First, \u201cas more food processing industries develop in India, a market is emerging that offers a slightly better premium.\u201d Second, and more surprisingly, the cost calculation has reversed.<\/p>\n Today, if you take cane and produce refined sugar, the operating costs are cheaper than producing non\u2011refined 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.<\/p>\n With sulphur expensive and sometimes difficult to obtain, mills find that \u201cproducing refined sugar from cane is cheaper than producing Low-Quality Whites (LQWs), in terms of chemicals and recoveries.\u201d Kiran estimates that \u201cout of the 28 million plus we produce, maybe 7 million is refined sugar,\u201d and expects that \u201cwithin the next 2 or 3 years, you\u2019ll see almost 10 million tonne will be refined.\u201d<\/p>\n This is an AI-generated chart. I cannot guarantee its accuracy and include it only for illustration purposes.<\/p>\n 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.<\/p>\n Domestically, mills are unable to pass these cost increases on. \u201cThe government technically controls everything,\u201d Kiran says, \u201cfrom 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.\u201d<\/p>\n The main issue is that India is \u201cthe only country in the world where there is no linkage between sugar and sugarcane prices.\u201d When cane prices are raised, but sugar prices are not, \u201cmills struggle to pay farmers on time, and cane arrears increase.\u201d<\/p>\n Kiran also wonders whether higher oil prices will prompt the Indian government to speed up the country\u2019s 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.<\/p>\n \u201cProbably next year, we’ll increase the blend to 22 per cent,\u201d he tells me. \u2018Then, 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.\u201d<\/p>\n Kiran concludes that in a year where \u201cwe started with about 5 million tonnes of opening stocks\u201d and expect 28.5 million tonnes of production, with 2.5\u20133 million tonnes going to ethanol and closing stocks \u201cslightly above 4.5 million tonnes,\u201d there is little slack in the system if either policy or geopolitics go wrong.<\/p>\n \u00a9 Commodity Conversations\u00ae 2026<\/strong><\/p>\n","protected":false},"excerpt":{"rendered":" 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. \u201cWe started the … <\/p>\n![\"\"](\"https:\/\/i0.wp.com\/commodityconversations.com\/wordpress2\/wp-content\/uploads\/2026\/03\/Image-2.png?resize=525%2C295&ssl=1\")
<\/p>\n![\"\"](\"https:\/\/i0.wp.com\/commodityconversations.com\/wordpress2\/wp-content\/uploads\/2026\/03\/Image-21.03.2026-at-10.14.png?resize=525%2C351&ssl=1\")
<\/p>\n