Sugar stocks plunged up to 7% today. Here's why

Sugar stocks fell up to 7 per cent in Thursday's trade amid a report suggesting the government was planning to discourage the diversion of sugar for ethanol production in a bid to ensure sufficient supplies of the sweetener in the local market.

Uttam Sugar Mills Ltd plunged 7.27 per cent to Rs 413.20 and was the worst-hit sugar stock.

Dalmia Bharat Sugar and Industries Ltd tanked 4.34 per cent to Rs 414.45. Balrampur Chini Mills Ltd tanked 3.98 per cent to Rs 414.15. Dwarikesh Sugar Industries Ltd was down 2.76 per cent at Rs 87.53. Triveni Engineering fell 2.67 per cent to Rs 353.60. Shree Renuka Sugars slipped 1.87 per cent to Rs 48.33. Dhampur Sugar Mills Ltd fell 1.44 per cent to Rs 255.80. Bajaj Hindusthan was flat at Rs 30.33.

As per a Reuters report, a lower diversion for ethanol was seen helping India, the second biggest sugar producer, increase output of the sweetener that is seen falling because of below normal rainfall in key growing states. As per the report, the government may ask sugar mills not to use sugar cane juice and B-heavy molasses - a byproduct with higher sucrose levels - to produce ethanol, sources told Reuters.

"After assessing the demand-supply situation, the committee of ministers decided to focus on sugar production this year," said one of the government sources told Reuters.

That said another report by Times NOW quoting sources suggested that there was no proposal under consideration to cut ethanol production and that the government was committed to meet 20 per cent  ethanol blending target by 2025.

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