Dull output, higher price put sugar stocks in a sweet spot

Global sugar prices hit 11-year high, domestic retail prices on the upward spiral too

- Ujjval Jauhari

Sugar stocks are back in the spotlight, buoyed by international prices rallying to around 11-year highs, as well as increasing domestic retail sugar prices. This has lifted shares of sugar producers such as Balrampur Chini Mills, Dwarikesh Sugar, Shree Renuka Sugar and Triveni Engineering and Industries by as much as 16% since the lows seen in March.

Domestic sugar production estimates are likely to be revised downwards, leading to an increase in retail prices of the sweetener. The Indian Sugar Mills Association (Isma) had in October estimated domestic sugar output, after diversion for ethanol production, during the sugar season 2022-23 (SS 23) at 36.5 million tonnes. The sugar season starts on 1 October and ends 30 September. However, these estimates were revised downwards to 34 mt by January-end.

Meanwhile, by March-end, key sugar-producing states such as Maharashtra and Karnataka saw much lower production. Isma data for sugar production as of 31 March showed that production in Maharashtra, post diversion for ethanol production, fell to 10.4 mt during the first six months of SS23, from 11.88 mt in March-end 2022. Production in Karnataka also fell to 5.52 mt from 5.72 mt during the same period.