Indian sugar stocks fell in early
trade after the government directed oil marketing companies to
reduce sugar diversion for ethanol production to zero for the
2026/27 supply year.
The latest ethanol tender excludes supplies produced from
sugarcane juice, sugar syrup and B-heavy molasses, cutting off
an important higher-margin outlet for sugar mills.
, ,
, ,
Shree Renuka and Dhampur Sugar fell between
2 per cent and 6 per cent in morning trade.
The decision limits companies’ ability to shift cane and
molasses between sugar and ethanol depending on market
conditions, potentially weakening margins and reducing the
return on ethanol-capacity investments.
The move is aimed at increasing domestic sugar availability
and easing record high prices in India, the world’s biggest
sugar consumer.
Sugar prices have risen more than 10% amid the festive
season, raising concerns over near-term food price pressures
before the main crushing season begins, said Siddhartha Khemka,
head of research of wealth management at Motilal Oswal Financial
Services.
The decision reflects the government’s priority of
protecting food supplies after concerns that weak rainfall in
key producing states could curb output, analysts from Motilal
Oswal and Choice Broking added.