Sugar stocks tank up to 7% on government's ethanol production curbs
Sugar stocks continued to correct on Friday for the second day following the curbs by the government on ethanol production.
Among the top losers were Shree Renuka Sugars which plunged over 7% in the opening trade amid high volumes, followed by Balrampur Chini, Rana Sugar, The Ugar Sugar Works and Dwarikesh Sugar, which lost up to 3%.
The government, via a notification issued on Thursday, directed sugar mills not to use cane juice or syrup to produce ethanol in a bid to increase sugar supplies by curtailing ethanol production.
Fuel retailers, under current contracts, are permitted to keep their procurement of ethanol derived from B-heavy molasses, a byproduct with higher sucrose levels, the government said. It would also allow the diversion of 1.04 million metric tons of B-heavy molasses for ethanol production under existing contracts, government officials said.
Citing government and trade sources, Reuters reported on Wednesday reported that lower diversion for ethanol will help the world's second-biggest sugar producer increase output of the sweetener, which is expected to fall because of below-normal rainfall in key growing states.
India's fuel retailers buy ethanol from sugar mills to blend with gasoline and they were paying higher prices for ethanol produced from juice and B-heavy molasses.
The Indian Sugar Mills Association, a producers' body, last month said sugar production is likely to fall 8% to 33.7 million metric tons in the 2023/24 marketing year.
