Sugar stocks down in India on production worries
India's sugar production has seen a decline compared to last year. As of January 15, 2024, the current marketing year's sugar production reached 149.52 lakh tons, a drop from 157.87 lakh tons during the same period in the previous year. This decrease has negatively impacted the stock prices of major sugar companies. Shares of Shree Renuka Sugars, Balrampur Chini Mills, Bajaj Hindusthan Sugar, Dalmia Sugar, Dhampur Sugar, and DCM Shriram Industries were down up to 4%.
Sugar mills association requests additional diversion for ethanol production
The Indian Sugar Mills Association (ISMA) has urged the government to permit an additional 10-12 lakh tons of sugar to be diverted toward ethanol production. This request follows revisions in sugar production estimates for 2023-24 by cane commissioners from major sugar-producing states like Uttar Pradesh, Maharashtra, and Karnataka, who have adjusted their estimates upwards by 5-10% each. The association believes that this year's sugar production could surpass initial expectations due to favorable weather conditions for the standing cane crop.
Government incentives and ISMA's appeal for higher procurement cost
In December, government allowed sugarcane to be used for ethanol production but limited sugar diversion to 17 lakh tons for the 2023-24 supply year ending in September. The government recently announced incentives for ethanol made from maize but ISMA argues that cane crops, being more efficient in terms of water and land use, should receive such incentives. The association has requested a higher procurement cost for sugarcane-derived ethanol for the sugar year 2023-24 which runs from October to September.
