Sugar stocks rally as govt mulls MSP, ethanol price hike

Investors and traders have gone sweet on sugar stocks with all major counters up 4-7 per cent today. And, it’s not just the optimism of the festive season driving these stocks.

Food Minister Pralhad Joshi has hinted that the government may soon lift the ban on sugar exports. A final decision will be taken after estimates for sugarcane output and sugar stocks for the next season come in.

"Exports had to be curbed last year as the production was lower than expectations. For this year, a decision is only likely once we have the numbers for the estimated sugarcane production," the minister said on the sidelines of a conference in Delhi.

He added that the expectations for production were good. “A decision on exports will come depending on where our closing stocks, balance, and opening stocks stand at. We are hopeful that sugar production will be good this year,” he noted.

According to preliminary estimates of The Indian Sugar and Bio-Energy Manufacturers Association released on Jul 30, gross sugar output in the 2024-25 season (Oct-Nov) is estimated at 33.31 million tonnes, down 2 per cent from 33.99 million tonnes last season.

The minister also said the government was considering raising the price of ethanol. “Our ministry is nodal ministry for ethanol, and we are in touch with the petroleum ministry. The hiking of ethanol price is well under consideration,” he said.

Rates of ethanol derived from sugarcane feedstock have not been hiked since the 2022-23 ethanol supply year (Nov-Oct). Currently, ethanol produced from cane juice is priced at Rs 65.61 per litre, while ethanol from B-Heavy and C-Heavy molasses is priced at Rs 60.73 and Rs 56.28 per litre, respectively.

The minister also said that the government is considering a proposal to increase the minimum selling price of sugar, which has remained unchanged at Rs 31 per kg, since February 2019 when it was last hiked.