Sugar stocks, including Balrampur Chini Mills, Shree Renuka Sugars, Triveni Engineering & Industries, Dalmia Bharat Sugar, Bajaj Hindusthan Sugar, Uttam Sugar Mills, Avadh Sugar & Energy, Dhampur Sugar Mills among others fell up to 5% on Thursday, 14 May, after the government tightened sugar export norms.
India, the second-largest producer of sugar globally, has prohibited sugar exports until the end of September, according to an official announcement, in an effort by the government to protect local supplies.
The decision comes after the Indian Sugar & Bio-Energy Manufacturers Association (ISMA) revised its production estimates downward. The industry organisation now anticipates that India’s total sugar production will be 32 million tonnes for the season concluding on 30 September, which is lower than its previous estimate of 32.4 million tonnes.
The action signifies a change from the government’s position in April, when it had dismissed the idea of restricting exports. The most recent notice, issued on Wednesday, bans international shipments with a few exceptions, including those already being loaded.
Ruchit Jain, Head – Equity Technical Research, Wealth Management, Motilal Oswal Financial Services, said that sugar stocks opened negatively due to news flows on sugar export curbs. It is advisable for traders to keep a wait-and-watch approach and avoid aggressive trades in the sector for the near term.
Weather risks add to supply concerns
The forecast for the upcoming harvest, starting in October, is still unclear. A possible weak monsoon, influenced by the approaching El Niño, could adversely affect production. Furthermore, escalating global fertiliser prices—driven by geopolitical strains related to the conflict in Iran—are increasing financial pressures on farmers.
Global market dynamics
As per a Bloomberg report, global sugar markets were earlier experiencing an oversupply, which caused New York futures to drop to a five-year low at the beginning of this year; however, analysts have now reduced their surplus predictions for the 2026–27 season. Prices have bounced back and are currently trading approximately 15% higher than those lows. Additionally, the ongoing conflict in Iran has increased the demand for biofuels, some of which are produced from sugar.
India’s Role in Global Trade
India has been instrumental in influencing global sugar markets lately. After a poor harvest in 2022–23, the nation implemented export limitations via yearly quotas. In the current season, exports were first permitted at 1.5 million tonnes in November, which was later raised by an additional 500,000 tonnes in February, prior to the recent complete restriction, as reported by Bloomberg.
(more to come)