Sugar stocks sweeten up to 9% on hopes of additional 1 million exports


Shares of sugar companies gained up to 9 per cent on the BSE in Thursday’s intra-day trade on reports that the government will allow 1 million tonnes of in sugar season 2021-22.

Balrampur Chini Mills, Triveni Engineering & Industries, Avadh Sugar & Energy, Sugar and Industries, Industries, Uttam Sugar Mills, Shree Renuka Sugars and Vishwaraj Sugar Industries were up between 3 per cent and 9 per cent on the BSE in intra-day trade. In comparison, the S&P BSE Sensex was up 0.27 per cent at 55,548 points at 10:10 AM.

In the past three months, have underperformed the market by falling in the range of 20 per cent to 35 per cent after the government imposed restrictions on from June 1. Meanwhile, the S&P BSE Sensex was down 4 per cent during the same period.

A report by Bloomberg indicates that the government is considering to allow additional sales of 1 million to 1.2 million tons of sugar for the year ending September 30, 2022.

Analysts at ICICI Securities believe that after the sugar industry has already exported 10 million tonnes of sugar in the current season, additional export of 1 million tonnes would bring down inventory levels to 5.7 million tonnes by September 2022.

Besides, the production for sugar is on the rise given the availability of sugar next season would be enough to export 6 to 7 million tonnes.

That apart, the brokerage firm believes that the additional export would be easily absorbed as global white sugar prices traded at $530 per tonnes (which is at extremely remunerative levels). “This would result in uptick in domestic sugar prices by Rs 2 / kg (current sugar prices in UP is Rs 35/kg) given festive season demand is likely to kick in from august onwards. We estimate average sugar realisation for UP based millers at Rs 35.5-Rs 36/kg for FY23 & FY24,” ICICI Securities said.

Meanwhile, the management at is confident that the will increase to over 10 million metric tonnes in September 2022, from 7.1-7.2 million metric tonnes in the previous year, on better demand for the Indian sweetener from Indian subcontinent, Middle East and Indonesia.

The company has revised India’s production estimate to 35.6 million metric tonnes for the 2021-22 sugar year. Export estimates, too, were revised to over 10 million metric tonnes. With Brazilian crops getting affected by frost in their 2021-22 crushing season, Indian mills have used this opportunity without any government support and Indian sugar so far has been exported to 74 countries in the current sugar season.

“Rallying energy markets, tight sugar availability, COVID lockdowns in China and logistical issues from the fallout of Russia’s military invasion of Ukraine have led to a surge in spot sugar prices across the globe. This may result in higher sugar price volatility in the near future due to uncertainty about how the war progresses. The geopolitical events have increased input costs for growers. These costs need to be absorbed by producers and passed on to end-users, which has resulted in high spot sugar prices,” the company said.

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor


Source link

Comments are closed.