Sugar sector sees sweet gains as govt mulls raising ethanol and MSP prices; EID Parry, Balrampur Chini, Shree Renuka jump up to 8%

Current rates of ethanol produced from cane juice, B-Heavy molasses, and C-Heavy molasses are Rs 65.61, Rs 60.73 and Rs 56.28 per litre, respectively.

Sugar stocks saw ample sweetness during the morning session after the Food Minister Pralhad Joshi announced the government is mulling increasing ethanol prices and raising minimum selling price (MSP) of sugar.

At 9.40 am, EID Parry, Balrampur Chini Mills, Bajaj Hindusthan Sugar, Shree Renuka Sugars and Triveni Engineering shares jumped over eight percent in trade, with as investors rushed to enter the counters.

Follow our live blog to catch all the updates

Regarding sugar exports, Pralhad Joshi stated, "We will take a decision after looking into next year’s production and availability of sugar.” The minister also said a committee of secretaries is deliberating on a proposal to increase the minimum selling price of sugar, which has remained unchanged at Rs 31 per kg since February 2019.

Joshi was optimistic about sugar production for the 2024-25 season starting October, citing favourable monsoon conditions. Ethanol prices, set by the government, have not been raised since the 2022-23 ethanol supply year (November-October).

Current rates of ethanol produced from cane juice, B-Heavy molasses, and C-Heavy molasses are Rs 65.61, Rs 60.73 and Rs 56.28 per litre, respectively. The food minister highlighted that the introduction of sugar MSP in 2018 has significantly reduced cane dues to farmers, with about 99 per cent of Rs 1.14 lakh crore paid.

"Even if sugar export is allowed, the subsidy on exports is a thing of the past. Sugar prices currently do not favor exports. Industry had hoped that MSP would be fixed at over Rs40/kg, with current demand at Rs45/kg. However, the prevailing macroeconomic environment does not provide a conducive environment for changing the MSP," said InCred Equities.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.