Sugar stocks slide as traders, dealers asked to submit information about May-Aug transactions

Shares of sugar manufacturers slumped 3-7 percent on September 12 on reports that India has requested that sugar traders and authorised dealers linked to mills submit information regarding all transactions conducted from May to August 2023 by Tuesday, September 12. This is an attempt to guarantee an abundant supply of sugar at affordable rates for the upcoming festive season, said a report by CNBC-TV18.

At 10:25 am, shares of Shree Renuka Sugars, Dalmia Bharat Sugar and Industries, EID Parry India, Balrampur Chini Mills, Dwarikesh Sugar Industries, Uttam Sugar Mills, Simbhaoli Sugars, Sakhti Sugars were trading 3-7 percent lower on the BSE.

The government, prioritising the issue, has invoked Clause 5 of the Sugar (Control) Order 1966 to gather comprehensive data on current sugar stocks. This move aims to ensure ample supply at fair prices and encompasses information on sugar stocks sold to entities other than sugar mills, such as traders, wholesalers, processors, and major retail chains, the report added.

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Analysts believe Sugar prices in India are on the rise and are anticipated to stay elevated for the next 2-3 months.

This increase in local sugar prices over the past three weeks is primarily attributed to concerns about production levels. Additionally, the delicate balance sheet, with an estimated closing inventory of only six months’ worth by the end of September (barely sufficient for two months of consumption during the festival season), has contributed to the spike, pointed out JM Financial Institutional Securities.

The delay in the start of the crushing season until the end of November, instead of the typical mid-October timeframe, is due to delayed festivals (which affects the availability of labour) and mills’ efforts to maximise recovery levels, added the brokerage firm.

On Monday, sugar stocks had witnessed buying after India announced global biofuel alliance at the G20 summit to boost the use of cleaner fuels. Shares of sugar companies rose on hopes that this global alliance for biofuel will increase the demand for molasses, which is used to produce ethanol.

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