The 20% ethanol blending target for the 2026-27 season is looking precarious, according to Praful Vithalani, Chairman of the All India Sugar Trade Association (AISTA). The core issue? A structural shift in feedstock that has effectively sidelined sugar. Vithalani pointed to the latest procurement tender floated by oil marketing companies for 1,100 crore litres of ethanol, where sugar’s role is shrinking fast. "The sugar share came down to 25% last season, and we will be left with around 2% only," he stated, citing the government’s decision to exclude sugar syrup and B-heavy molasses from procurement lists. This regulatory pivot has forced a rapid recalculation of supply chains for major fuel distributors.
Maize is now the critical variable, and it’s expensive. Vithalani estimates that rice can supply roughly 325 crore litres and damaged grains around 100 crore litres, leaving maize to fill a massive 675 crore litre gap. That volume requires approximately 18 million tonnes of maize. The problem? Maize prices have already jumped 20-25% year-on-year. "As far as maize is concerned... 675 crore litres looks a challenge," Vithalani noted. The cost curve is steep, and supply availability is tightening just as demand for blended fuel remains non-negotiable under government mandates.
For market watchers, the sugar sector offers a different but linked narrative. AISTA is set to release its production estimate earlier than usual due to El Niño-driven weather uncertainties. Preliminary data from Vithalani’s firm, Jayan Kesarja & Company, alongside international analysts, pegs sugar production at approximately 27 million tonnes. Despite the production ambiguity, near-term price stability is likely. Government quota releases have buffered the market, and adequate stocks are available to cover festive demand. Most mills are expected to resume crushing operations by early November, keeping domestic supply steady for the next two months.
The next catalyst is the tender outcome, expected in early November. This will provide the first concrete data point on actual ethanol availability for the new supply year. Vithalani expressed skepticism about hitting the 20% mark, calling it a "challenge" rather than a certainty. However, he noted that a second procurement tender later in the season could alter the math, depending on how maize and rice prices evolve. Traders should monitor the final production estimates and the timing of the second tender as key indicators for both fuel blending costs and sugar export potential.