Sugar Stocks Slide After Centre Tightens Export Rules Till September

Shares of major sugar companies came under selling pressure on Thursday after the government prohibited sugar exports till 30 September, triggering concerns over export volumes and sector earnings.

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Dhampur Sugar Mills, Balrampur Chini Mills, Shree Renuka Sugars, Triveni Engineering & Industries, Dalmia Bharat Sugar, Bajaj Hindusthan Sugar, Uttam Sugar Mills and Avadh Sugar & Energy declined up to 5% during trade following the government notification.

The Centre on Wednesday revised the export policy for sugar from “restricted” to “prohibited” through a notification issued by the Directorate General of Foreign Trade (DGFT). The order covers raw sugar, white sugar, and refined sugar exports, with limited exemptions for shipments already in the pipeline and quota-based exports to certain countries.

Production Concerns Drive Policy Shift

The government’s latest move follows weaker production estimates for the ongoing sugar season ending 30 September.

The Indian Sugar & Bio-Energy Manufacturers Association (ISMA) recently lowered its sugar production estimate for the current season to 32 million tonnes from its earlier projection of 32.4 million tonnes.

The revised estimate increased concerns around domestic availability, especially after lower sugarcane yields were reported in several producing regions.

The export restriction marks a reversal from the government’s earlier position in April, when officials had ruled out tighter export curbs.

Under the latest notification, exports linked to quota obligations for the European Union and the United States will continue. Shipments under the Advance Authorisation Scheme and government-to-government agreements for food security purposes have also been exempted.

Cargoes already loaded or cleared through customs before the notification date will also be permitted.

Weak Monsoon Risks Remain In Focus

Weather-related risks continue to cloud the outlook for the next sugar season. Worries about a possible El Nino impact on the upcoming monsoon have sparked concerns of lower sugarcane output during the next harvesting cycle, which begins in October.

Rising global fertiliser prices have also added pressure on production costs. The increase in fertiliser prices follows supply disruptions and geopolitical tensions in West Asia, particularly linked to the Iran conflict.

Ruchit Jain, Head of Equity Technical Research at Motilal Oswal Financial Services, said sugar stocks reacted negatively to the export-related developments and advised caution in the near term.

Global Sugar Prices Recover

According to Bloomberg, global sugar markets had faced oversupply concerns earlier this year, which pushed New York sugar futures to a five-year low.

However, surplus estimates for the 2026-27 season have since been revised lower, leading to a rebound in prices. Global sugar prices are currently trading nearly 15% above their earlier lows, as per the report.

The report also noted that higher demand for biofuels amid rising crude oil prices has supported sugar-linked ethanol demand in international markets.

India remains one of the world’s largest sugar producers and exporters after Brazil. The country had initially allowed exports of 1.5 million tonnes for the current season before approving an additional 500,000 tonnes quota in February.

The latest export ban is expected to keep domestic supply conditions stable over the coming months as the government monitors production trends, consumption demand and global market developments.