Sugar Stocks Gain Up To 5% As Govt. Likely Export Plans To Keep Sugar Prices Firm

Sugar stocks in trade on Thursday (August 25, 2022) gained up to 5%. With production projected to be nearly40 million tonnes (mt) in the 2022-23 sugarseason (starting October 1), the central government may be looking at a policy to allow exports of around 8 mt of the sweetener in two tranches. In the first tranche, market sources said exports of around 5 mt could be permitted. This could be expanded by another 2.5-3 mt only after assessing the price situation and supply along with the sugar exports demand scenario.

On the news, stocks from the pack Balrampur Chini Mills gained up to 5%. Similar traction was seen in Dhampur Sugar (up by up to 3.6%), Ravalgaon Sugar (up 5%), Ugar Sugar Works (up by up to 3.78%), Uttam Sugar Mills ( up over 3%) etc.

Brokerage firm ICICI Direct is of the view that the news is positive for the sugar industry. "We believe 8 MT of sugar export in 2022-
23 season would keep inventory level ~6 MT as on September 2023. This would keep sugar prices firm above Rs. 35. Also, most UP sugar millers would export refined white sugar, which is expected to fetch Rs. 37-40 / kg according to prevailing white sugar prices", mentions the brokerage.