EID Parry, Balrampur Chini: Sugar Stocks Up 8% As Govt Mulls Ethanol Price, Sugar MSP Hike
Sugar Stocks Rally Today: Sugar stocks saw ample sweetness during the morning session after Food Minister Pralhad Joshi announced the government is mulling increasing ethanol prices and raising the minimum selling price (MSP) of sugar.
At 9.40 am, EID Parry, Balrampur Chini Mills, Bajaj Hindusthan Sugar, Shree Renuka Sugars and Triveni Engineering shares jumped over eight per cent in trade.
”The petroleum ministry is seized of the matter. We are in touch with petroleum ministry. It is well under consideration to hike the ethanol price,” Joshi told reporters on the sidelines of an industry conference here. Regarding sugar exports, Joshi stated, ”We will take a decision after looking into next year’s production and availability of sugar.” The minister also said a committee of secretaries is deliberating on a proposal to increase the minimum selling price of sugar, which has remained unchanged at Rs 31 per kg since February 2019.
Joshi was optimistic about sugar production for the 2024-25 season starting October, citing favourable monsoon conditions. Ethanol prices, set by the government, have not been raised since the 2022-23 ethanol supply year (November-October). Current rates of ethanol produced from cane juice, B-Heavy molasses, and C-Heavy molasses are Rs 65.61, Rs 60.73 and Rs 56.28 per litre, respectively. The food minister highlighted that the introduction of sugar MSP in 2018 has significantly reduced cane dues to farmers, with about 99 per cent of Rs 1.14 lakh crore paid.
India’s sugarcane cultivation area has increased by 18 per cent to 6 million hectares in the last decade, with production up 40 per cent to 491 million tonne, Joshi added. Speaking on the occasion, Food Secretary Sanjeev Chopra said the sugarcane crop outlook for 2024-25 is ”very good” due to favourable monsoon conditions. In his welcome address, industry body ISMA President M Prabhakar Rao requested the government to increase the sugar MSP to at least Rs 39 per kg and allow exports of 2 million tonne. ISMA has projected gross sugar output at 33.9 million tonne in the 2024-25 season (October-September) with upward revision looking into good monsoon.
With diversion of 4-4.5 million tonne for ethanol production and a closing stock of 8.3 million tonne, there will be 2 million tonne available for exports in the 2024-25 season. ”Exports should be allowed immediately as the global prices have firmed in the last two weeks on reports of likely drop in Brazil crop. We can regain the lost market,” ISMA Vice President Gautam Goel added.
Analysts’ Take
“Even if sugar export is allowed, the subsidy on exports is a thing of the past. Sugar prices currently do not favor exports. Industry had hoped that MSP would be fixed at over Rs40/kg, with current demand at Rs45/kg. However, the prevailing macroeconomic environment does not provide a conducive environment for changing the MSP,” said InCred Equities.
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