Sugar stocks rise: Top Gainers Bajaj Hindusthan, Shree Renuka, and Avadh Sugars Shine

Sugar stocks have become sweeter today and have started rallying since the morning session. Whereas Raw sugar futures have reached their highest closing price in two months due to concerns over Indian exports. India, the second-biggest sugar shipper, is expected to curb supplies for the season starting in October.

India ranks as the second-largest global producer of sugarcane, trailing only Brazil. Approximately 21% of India’s agricultural land is dedicated to sugarcane cultivation, contributing to around 22% of the world’s total sugarcane production.

Indian exports are crucial in meeting global demand once Brazil, the world’s leading sugar exporter, concludes its harvest later this year. A concern with a shortage of sugar in the first months of 2024 has caused a jump in the spread commanded by the March futures contract over the price for delivery in May.

In Brazil, scattered rains are seen hitting the centre South, the top growing region, for the rest of this week, according to meteorologists at Rural Clima. Above-average rains could disrupt sugarcane harvesting and interrupt loadings at the main ports, bringing additional supply concerns.

Lack of rain threatens to cause a shortfall in Indian sugar production, which could lead to export restrictions. Therefore, sugar exports are likely to remain suspended in FY24, as the weather is a big negative factor. Last year, despite good monsoon rains, sugar production fell. This year, with El Nino, the government doesn’t want to take the risk of allowing exports.

A reduced crop could lead the Indian government to take measures such as restricting exports to prevent a significant rise in domestic sugar prices in anticipation of upcoming elections early next year. This would be akin to the actions India has already taken regarding rice.

The price of sugar ethanol in Brazil has reached a one-month high, and the increase in crude oil prices has, in turn, boosted demand for biofuel blending.

Leading to this, sugar stocks have started rallying today. Let’s explore the top-performing sugar stocks for today:

Furthermore, the upcoming festival season is expected to drive up the demand for sugar consumption in India. Investors should consider keeping these stocks on their radar, as they may potentially outperform in the upcoming sessions.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet, and is subject to changes. Please consult an expert before making related decisions.