Sugar accounts for just ~38 percent of ethanol supplied, with grains like rice and maize making up the rest
Shares of sugar makers surge on government’s ethanol push, but stagnant prices and supply risks threaten to spoil the party
Industry estimates indicated that sugar production in two of the world’s largest producers, Brazil and India, may fall short of expectations
Dhampur Sugar Mills Ltd, Bajaj Hindusthan Sugar and Dwarikesh Sugar Industries Ltd rose between 6 - 9 percent in anticipation of ethanol price hike approval by the CCEA.
Global prices have turned weak, domestic output has acquired a dull look and ethanol procurement has shifted focus to grain-based feedstock
B-heavy molasses price can be increased by Rs 1.82 and C-heavy by Rs 6.87 per litre, sources told CNBC-Awaaz
Reasonable valuations, good monsoons make sugar stocks having large ethanol production capacity buy picks for next few weeks ahead.
After six consecutive record-breaking sessions, the Indian benchmarks, Sensex and Nifty, finally took a breather on September 27. The markets had been riding high on optimism fueled by the US Fed's supersize rate cut and expectations of increased foreign inflows. However, a slump in banking shares cooled the rally, halting the markets' upward momentum.
Sugar stocks surged after the government greenlit the use of sugarcane juice and B-Heavy molasses for Rectified Spirit and Extra Neutral Alcohol production, boosting shares of major players like Bajaj Hindustan Sugar and Balrampur Chini Mills.
Now, in addition to cane juice and syrup, mills can also use B-Heavy and C-Heavy molasses to produce ethanol
Sugar stocks climbed up to 5% after reports that the government is considering raising ethanol prices to boost production and meet the 20% blending target by 2025-26.
DAM Capital warned that any permanent changes to ethanol blending policies or molasses quota obligations might negatively impact sentiment in sugar stocks.
The sugar industry is advocating for higher procurement prices for ethanol, support for sugar cane harvesters, and a long-term policy for sugar import-export and ethanol production.
Recently, on June 14, sugar stocks had rallied up to 13 percent, driven by expectations of a hike in the minimum sale price for the 2024-25 season.
Indian benchmark indices Nifty and Sensex ended higher for the third straight session on June 13. Here are some of the stocks that moved the most intraday.
Sugar stocks such as Shree Renuka Sugars, Balrampur Chini Mills, Dalmia Bharat Sugar, EID Parry zoomed up to 13 percent amid report that the government is considering increasing minimum support price (MSP) of sugar for 2024-25.
On sectoral front, media, auto, capital goods and FMCG were down 0.5-1 percent, while metal and realty up 0.5 percent each
The Centre announced an increase in the sugarcane's Fair and Remunerative Price (FRP) to Rs 340 a quintal, up 8 percent from the current FRP.
While EID Parry was trading with gains of over 5 percent, Balrampur Chini Mills, Shri Renuka Sugars and Bajaj Hindusthan fell as much as 3 percent.
In this episode of Market Minutes, Harshita talks about the key factors to watch out for today before the domestic equity market opens. After rallying nearly 3 percent last week, markets may take a breather, taking cues from Wall Street and Asian peers. PB Fintech is in focus after Softbank sells Rs 914 crore shares. Mazagon Dock Shipbuilders signs a $42 million contract with a European client. Catch the global market setup, and also hear from Unmesh Sharma, Head of Institutional Equities at HDFC Securities in the Voice of the Day segment. Market Minutes is a morning podcast that puts the spotlight on hot stocks, key data points, and developing trends.
The government has said no ethanol from sugarcane juice and B-heavy molasses will be procured by oil marketing companies (OMCs) with immediate effect
Sugar stocks, after special emphasis on ethanol, have turned into structural play rather than cyclical plays which they used to be earlier
The tailwinds from higher domestic prices and ethanol production will offset lower exports and improve realisations of sugar mill companies, said analysts
This step is reportedly an attempt to guarantee an abundant supply of sugar at affordable rates for the upcoming festive season.
Record production, surging exports and the ethanol story is working wonders of Indian sugar companies. But can the past returns sustain despite an ongoing correction?