Biyani said Maharashtra and Karnataka are the most vulnerable states during years of weak monsoon and El Niño conditions, as both regions rely heavily on rainfall for sugarcane cultivation. Uttar Pradesh is relatively better placed because of its canal irrigation network, though it could also face some impact if rainfall remains below normal.
He noted that sugarcane requires adequate water availability throughout the key monsoon months. “For Maharashtra and Karnataka, rainfall has to be good – so all the four months of June, July, August and September would be important.”
According to Skymet Weather Services, the southwest monsoon has remained stalled since June 8 after making initial progress along the west coast, raising concerns over rainfall in key farm belts. With the all-India rainfall deficit already at 32%, the weather agency expects it could widen to 40% in the coming week if conditions fail to improve.
Maharashtra, Gujarat, Madhya Pradesh, Rajasthan, Bihar and Jharkhand are among the states facing the highest risk, although July and August are still expected to play a crucial role in reviving the monsoon.
Despite concerns over rainfall and softer crude oil prices, the broader outlook for the sugar industry remains favourable. Government measures to promote ethanol blending and the approval of flex-fuel engines supporting 100% ethanol usage continue to provide long-term growth opportunities for the sector.
Biyani expects sugar prices to remain firm due to lower production this year. However, he cautioned that share prices could see some pressure as the recent rally linked to elevated crude prices eases.
According to him, the sugar sector is likely to remain range-bound as government intervention limits sharp upside or downside. In years of lower cane production, authorities can curb ethanol diversion to boost sugar output, helping balance the market.
Within the sector, Elara Securities prefers Balrampur Chini as its top pick.
For the entire discussion, watch the accompanying video
