Sugar stocks, including Uttam Sugar, Dhampur Sugar Mills, Rana Sugars, EID Parry India, and Balrampur Chini Mills, soared by up to 20 percent in today’s trade, amid concerns over a potential sugar supply shortage, followed by sugar futures surged to their highest level in three weeks.
As per PTI’s report, India’s sugar production has dropped by 16.13 percent to 23.71 MMT so far in the 2024-25 season. JM Financial Institutional Securities states that sugar prices in key states have increased by 7 to 9 percent sequentially from January to the present, which is expected to keep the sugar division’s profitability strong in Q4FY25.
Estimates and Forecasts
Industry estimates suggest that sugar production may fall short of expectations in Brazil and India, two of the world’s largest producers. Additionally, there were also increasing worries regarding whether India would be able to maintain its export levels in the next few months.
The Indian Sugar and Bio-energy Manufacturers Association (ISMA) has lowered its sugar production forecast for the 2024-25 season, reducing its estimate from 27.27 MMT (Million Metric Tonne) in January to 26.4 MMT presently.
Brazil’s government crop forecasting agency, Conab, has also reduced its sugar production estimate from its past projection of 46 MMT to 44 MMT for the 2024-25 season.
At the Global level, the International Sugar Organization (ISO) increased its forecast for the global sugar deficit in the 2024-25 season, raising it from its previous estimate of -2.51 MMT in November to -4.88 MMT currently. This stresses a shrinking supply situation, in comparison to the global sugar surplus of 1.31 MMT recorded in the 2023-24 season.
Factors Contributing to Supply Concern
Significant reasons for concerns about a potential supply shortage in India include lower sugarcane yields, weaker sugar recovery in Uttar Pradesh, and a decline in the sugar production levels in the major producing states of Maharashtra, Karnataka, and Uttar Pradesh.
Internationally, poor weather conditions like extended dry weather, drought, and excessive heat in Brazil, the world’s largest sugar producer, have contributed to the supply worries because of lower sugarcane yields.
Sugar Stocks That Gained
Among the top gainers on NSE, shares of Uttam Sugar Mills Ltd were leading as it hit a 20 percent upper circuit at Rs 230.9 per share, Magadh Sugar & Energy Ltd gained 15.4 percent hitting an Intraday high at Rs 590.95, Avadh Sugar & Energy Ltd was up 9.7 percent at Rs 430, Dalmia Bharat Sugar and Industries Ltd gained 8.8 percent at Rs 344.4, Mawana Sugars Ltd surged 7.6 percent at Rs 89.4 and Dwarikesh Sugar Industries Ltd gained 7 percent at Rs 39.27.
Written By Adhvaitha Nayani
