The sugar sector stocks traded in the red as soon as markets opened today. This fall came after the government of India banned the export of sugar with immediate effect until September 30. 

Dwarikesh Sugar Industries fell the most, among the sugar stocks, dropping 4%. It was followed by Dhampur Sugar Mills, falling 3.44%; Uttam Sugar Mills, declining 3.24%; Bajaj Hindusthan Sugar, sliding 3.2%; and many others followed the path. 

However, Bannari Amman Sugars bucked the trend to trade 5% higher at Rs 3748.70.

Key losers among sugar sector stocks

The list of sugar sector stocks indicated that the stocks are among the very few sectors in the red today. 

Bajaj Hindusthan Sugar, which was the fifth major loser among the sugar stocks, is India’s largest sugar producer, and is often favoured for high-volume, short-to-medium-term momentum trading.

Govt bans sugar exports till September 30

The Indian government prohibited sugar export with immediate effect until September 30. The move to tighten overseas shipments comes amid domestic supply considerations.

A directive from the Directorate General of Foreign Trade, under the Ministry of Commerce and Industry, outlines a ban on raw, white, and refined sugar. This represents a significant change in policy, shifting from “restricted” to “prohibited.” This is a notable turnaround since the government previously permitted limited sugar exports in anticipation of surplus production.

According to the notification, shipments will be allowed if loading began before May 13 or if consignments were already with customs officials before the ban was implemented. “The export of sugar shall be allowed on the basis of permission granted by the Government of India to other countries to meet their food security needs and based on the request of their governments,” the order read.

The ethanol blending factor

Just to give you a context, India is the world’s second-biggest sugar producer after Brazil. It is also a major exporter. When India restricts supply, the global availability decreases, particularly impacting purchasers in Asia and Africa.

Apart from the export ban, the government’s focus on a 20% ethanol blending target by 2025-26 has raised demand for distilleries. However, sugar and ethanol makers are seeing a boost in profitability due to an increase in ethanol prices, coupled with high international sugar prices. 

FY27 sugar output concerns

There are other concerns apart from the Govt ban. Owing to El Niño, there are worries about the output next season. The production in FY27 is estimated to see a drop as a result of erratic climate concerns. The IMD has forecast a deficient monsoon as a result of El Niño. There are also concerns about fertiliser shortages linked to the West Asia crisis.