There was sweet news for the sugar sector from Indian Sugar Mills Association (ISMA).
ISMA has put out a report stating that India's sugar output may decline 3% to 31.5 million tonnes (MT) in the current marketing year on untimely rains and pest attacks that affected the cane crop, as well as diversion of cane juice for ethanol. It stated that sugarcane crop in the three main growing states of Uttar Pradesh, Maharashtra and Karnataka, which contribute around 80 per cent to the total sugar output, have been impacted adversely.
ISMA, in July, had projected a production of 35 MT in the 2018-19 season that started this month, taking into account higher cane acreage and forecast of normal monsoon.
Putting to rest fears of a shortage situation, the association has said that despite the estimated fall in production, there would be surplus sugar available due to huge carry-over stocks from previous year. The total availability of sugar would be 42.7 MT during 2018-19 as against the annual domestic demand of 25.5-26 MT. Even if mills export 4-5 MT of sugar, the closing stock would be significantly high at 11-13 MT.
Following this news, sugar stocks are in a celebratory mood with Dhampur Sugar getting locked at the 10% YC at Rs.171.15; Shree Renuka is up 3% at Rs.13.95 and Balrampur Chinni too rose 3% to Rs.111.60. Dalmia Bharat Sugar, EID Parry, Triveni Eng, Uttam Sugar, KCP Sugar; all sugar stocks across the board are up currently.