Sugar stocks Bajaj Hindusthan Sugar, Balrampur Chini, others rally up to 8% even as govt tightens stock limits

Sugar stocks rallied up to 8% on Thursday even as the government tightened inventory limits, barring dealers handling more than 10 metric tonnes of sugar per month from holding stocks for over 15 days.

Bajaj Hindusthan Sugar shares rose around 8% to Rs 22, while Shree Renuka Sugars and Dhampur Sugar Mills gained 6-7%. Balrampur Chini Mills climbed over 3%, while EID Parry India advanced nearly 2%.

Why are sugar prices rising?

India’s sugar demand typically rises between August and November as the country celebrates festivals such as Ganesh Chaturthi, Dussehra and Diwali, driving demand for sweets, biscuits and other confectionery products. Manufacturers of these products also build inventories ahead of the festive season, further supporting sugar demand.


Last month, the government directed dealers to hold sugar stocks for no more than 30 days to bolster supplies. Despite the move, sugar prices have risen 10% over the past month to record highs, with analysts expecting prices to remain elevated for at least the next three months. Meanwhile, patchy rains and dry weather conditions have affected sugarcane output. Since the crop requires substantial water for irrigation, concerns over supply have added to upward pressure on prices.

Also read |India tightens sugar stock limits to tame record prices

The worsening supply outlook in Brazil, the world’s largest sugar producer, has also triggered a sharp rally in sugar prices. The country has warned of a delay in the harvest due to adverse weather conditions.

Adding to the uncertainty, Brazil has suspended its bi-weekly harvest and production reports, limiting visibility into the country’s supply outlook.

Meanwhile, a shift towards ethanol is adding to concerns over a potential sugar supply crunch. In June, 58% of Brazil’s cane juice was diverted towards ethanol, which is expected to offer better profitability than sugar. Brazil also raised its mandatory ethanol blending target to 32% in July from 30% in June, significantly above the 25-27% levels seen just months earlier.

India to cut sugar import duty?

India, the world’s second-largest producer of sugar, is considering reducing its import duty on the commodity to help curb domestic prices that recently climbed to a record, Bloomberg reported. Officials are weighing plans to lower or scrap the 100% tax on inbound shipments in an effort to boost local supplies, the report said, citing sources. This come just before a seasonal surge in sugar demand for the festival season, adding to the incentive to rein in rising prices.

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(With inputs from agencies)

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