D-St gets sweet moment as sugar stocks surge 11%

Sugar stocks experienced a notable boost as prices climbed sharply due to tight inventories and supply concerns. Balrampur Chini Mills rose by over 3% to Rs 752, Dhampur Sugar Mills increased by 8% to Rs 200, Uttam Sugar surged 11% to Rs 359, Triveni Engineering climbed 4% to Rs 306, and Eid Parry gained over 4% to Rs 831. The rise in sugar prices came from a combination of factors.

The festive period, with India's demand for sweets, biscuits and other confectionery items typically surging from August to November, contributed to the higher demand for sugar. Last month, the government restricted dealers to hold sugar stocks for no more than 30 days to boost supplies, but prices have risen by 10% over the past month to record highs. Analysts anticipate the prices to remain elevated for at least the next three months.

Supply concerns played a significant role in the sugar price spike, particularly the worsening supply outlook in Brazil, the world's largest sugar producer. Brazil has faced adverse weather conditions, suspended its bi-weekly harvest and production reports, and raised its mandatory ethanol blending target, intensifying concerns over a potential sugar supply crunch.

Supply issues were not limited to Brazil, as intense heatwaves and El Nino conditions in the EU and the UK, along with lower sugar production estimates in Asia, added to the fears of tighter supplies.

Global deficit estimates suggest a tighter market, with Green Pool projecting a global sugar deficit of 3.3 million tonnes and StoneX estimating the shortfall at 1.7 million tonnes. The International Sugar Organisation forecasts a deficit of 0.26 million tonnes. As production concerns mount across major sugar-producing regions, and global benchmark prices continue to rise, the supply outlook has emerged as the key factor driving the sharp move in sugar prices.