Thai Cane Shift Karnataka Ruling Send Sugar Prices

Introduction

Over the past week the sugar complex has seen concrete, price-relevant developments: Thai growers are accelerating a switch from cane to cassava amid collapsing cane returns and disease; a key Indian court has upheld a higher procurement price for sugarcane in Karnataka; and ICE sugar futures recorded a sharp spike in trading volume. These events tighten the link between on-the-ground supply shifts and short-term trading behavior.

Thailand: Farmers Move from Cane to Cassava

On December 9, 2025, reports showed Thai sugarcane growers—especially in the northeast—are reacting to a severe drop in cane prices and outbreaks of white leaf disease by converting land to cassava. The government-set 2025/26 cane price is 900 baht per metric ton, roughly 22% below last year and reportedly below many producers’ break-even cost. That economic stress, combined with disease risk, has prompted some farmers to prioritize cassava, which currently benefits from stronger demand (notably from China) and reduced competition from neighboring suppliers.

Production forecasts and timing

Paradoxically, forecasters expect Thai sugar output to rise in the immediate 2025/26 season. Green Pool projects a 6% year-on-year increase to about 10.7 million tonnes for 2025/26, but warns of a potential 7.5% fall in 2026/27 if the cane-to-cassava transition widens and disease persists. Think of this like a reservoir that fills this year from recent rains but then sees lower inflows as upstream tributaries are diverted—short-term volume can increase while longer-term supply risk grows.

Implications for prices

• Near term: the projected 2025/26 increase offers downward pressure on prices, moderating rallies.
• Medium term: if farmers permanently replant with cassava, Thai cane acreage and exports could shrink, tightening exportable supplies and supporting higher prices later.
• Quality and logistics: disease-driven quality declines may force mills to blend or reduce output of refined sugar, creating localized shortages even with aggregate tonnage up.

India: Karnataka Court Upholds Higher Cane Price

Also on December 9, 2025, the Karnataka High Court declined to stay the state government’s November 8 notification that set a procurement price for cane above the centrally mandated Fair and Remunerative Price (FRP). This is a material development for Indian mills and the domestic sugar balance.

Why this matters

Karnataka is a significant cane-producing state. A legally backed higher price increases mills’ input costs and squeezes margins unless mills accept lower profitability or pass the increase through to refined sugar prices. For an industry already operating on thin margins in many regions, mandated higher payments can reduce crushing throughput if mills delay purchases or limit cane intake to control cash flow.

Trading Signals: ICE Sugar Futures Activity

Futures activity shows traders are actively repositioning amid these supply and cost signals. On December 9 futures volume on ICE leapt to 126,645 contracts—nearly double the prior day’s 67,733—while open interest eased modestly by about 1,657 contracts to 943,558. The surge in volume with slightly lower open interest suggests active rotation of positions and short-term liquidity-driven moves rather than a fresh wave of new long-term positions.

Interpreting the flows

• Higher volume indicates elevated attention and potential volatility as participants price in policy and crop-shift risks.
• Falling open interest amid heavy trade often reflects profit-taking, stops being triggered, or position compression ahead of clearer signals.

Conclusion

This week’s developments present a clear interplay of supply-side change and policy-driven cost pressure. Thailand’s farmer pivot toward cassava signals a structural risk to cane acreage that may cap future supply, even if 2025/26 production is temporarily higher. In India, Karnataka’s court-backed higher cane price raises costs for mills and could restrain domestic availability or force upward movement in local prices. The spike in ICE futures volume underlines increased trader focus and short-term volatility. Together, these concrete events warrant close monitoring for anyone invested in sugar prices or involved in supply planning for the coming seasons.

Key takeaways: watch Thai acreage trends and disease progression, monitor Indian state-level pricing actions, and follow futures volume and open-interest shifts as immediate indicators of sentiment and positioning.