Sugar Stocks Surge Up to 8% as Government Considers Hikes in Ethanol Prices and Minimum Selling Price

Sugar stocks jumped by as much as 8% after Food Minister Pralhad Joshi announced that the government is thinking about raising ethanol prices and increasing the minimum selling price (MSP) of sugar.

Balarampur Chini saw the biggest gain, rising 8% to ₹260.5. Other significant gainers included Avadh Sugar & Energy, Bajaj Hindustan Sugar, and Dalmia Bharat, all of which surged more than 5%. Andhra Sugar, DCM Shriram Industries, and EID Parry also increased by over 3%.

This rally followed Joshi’s remarks on Thursday regarding the industry’s request to raise the sugar MSP from its current rate of ₹31 per kg, along with a possible increase in ethanol prices.

“We are reviewing sugar production estimates for the 2024-25 season, which starts in October, before deciding on exports. The industry has provided us with figures, and we have our own estimates,” Joshi explained to reporters during the India Sugar and Bio-Energy Conference organized by the Indian Sugar and Bio-Energy Manufacturers Association (ISMA).

He expressed optimism about sugar production, stating, “A decision on exports will depend on our closing and opening stock levels. We expect good sugar production this year.”

According to early estimates from ISMA released on July 30, gross sugar output for the 2024-25 season is expected to be 33.31 million tonnes, which is a 2% decline from the 33.99 million tonnes produced last season. The minister also noted that the government is considering raising ethanol prices, stating, “Our ministry is in talks with the petroleum ministry about this, and a hike in ethanol prices is being considered.”

Currently, ethanol prices from sugarcane have not changed since the 2022-23 supply year. Ethanol made from cane juice is priced at ₹65.61 per litre, while ethanol from B-Heavy and C-Heavy molasses costs ₹60.73 and ₹56.28 per litre, respectively.

Additionally, the minister mentioned that the government is reviewing a proposal to increase the MSP of sugar, which has remained at ₹31 per kg since its last increase in February 2019.