Sugar stocks rallied up to 13 percent on July 14 driven by expectations of a hike in the minimum sale price (MSP) for the 2024-25 season. Currently, the MSP stands at Rs 31 per kilogram, while the industry is demanding an increase to Rs 41 per kilogram.
Official government sources have reportedly indicated that any hike would be reasonable.
Shares of Mawana Sugars, Simbhaoli Sugars, Shree Renuka Sugars, KM Sugar Mills jumped up to 13 percent. Andhra Sugars, Avadh Sugar & Energy, Magadh Sugar & Energy stocks rose around 9 percent.
Bajaj Hindusthan, Bannari Amman Sugars, Dalmia Bharat Sugar & Industries, DCM Shriram Industries, EID Parry, and Dharani Sugars & Chemicals stock were also trading with gains of up to 10 percent.
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Rana Sugars, Balrampur Chini Mills, Dhampur Sugar Mills and Triveni Engineering and Industries rose in a range of 3-6 percent.
Sugar stocks have been on a bull run over the past month, rising up to 20 percent.
It is worth noting that since 2019, sugar's minimum selling price has remained unchanged at Rs 31 per kg. The industry has been seeking that the minimum selling price of sugar be increased to Rs 40–41 per kg.
Before the general elections, the Cabinet Committee of Economic Affairs approved a record 7.4 percent rise, or Rs 25, in sugarcane FRP to Rs 340 per 100 kg for the sugar season 2024-25 (Oct-Sep), with a baseline recovery rate of 10.25 percent.
Atul Chaturvedi of Shree Renuka Sugar said that apart from the MSP hike in sugar, the industry is awaiting hike in ethanol prices for next season as the FRP for the season already has been announced.
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In related news, the Ministry of Petroleum and Natural Gas has reported progress in ethanol blending. As of May, a 15 percent ethanol blending rate has been achieved, with the country on track to reach the 20 percent blending target.
Currently, E20 fuel is available at 13,569 PSU outlets out of a total of 81,529 outlets. To achieve the 20 percent blending target, 1,016 crore liters of ethanol will be required.
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