Sugar Stocks bounce back from their low on possible allowance of additional 1 million tonnes of sugar exports
According to a report, government may announce to allow 1 million tonnes of sugar exports in sugar season of 21-22.
In past 3 months, the sugar stocks have relatively performed poorly. The stocks dropped in the range of 20 per cent to 35 per cent after the government-imposed restrictions on sugar exports from June 1 while S&P BSE Sensex was down only by 4% for the same period.
Experts believe that the additional 1 million tonne of sugar export post the export of 10 million tonnes will help reduce the inventory to 5.7 million tonnes by September 2022. Not only this, the increased activity of exports may absorb the global white sugar prices traded at $530 per tonne. This along with upcoming festive season can help increase the domestic sugar prices by Rs2/kg which currently stands at Rs. 35/kg.
Another positive sentiment that has helped the Indian sugar industry was the frost damaging the Brazillian crops in current fiscal’s crushing season.
However, going forward, multiple geo-political events such as Rallying energy markets, tight sugar availability, COVID lockdowns in China and logistical issues from the fallout of Russia’s military invasion of Ukraine could lead to surge in spot sugar prices. The increase in prices will increase the input cost for farmers which would have to be consumed by the producers and passed on to the customers.
On account of these events, the sugar stocks have corrected heavily from their lows. Balrampur chini seems to be a darling among the pack.
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