In today’s session, Balrampur Chini Mills gained over 6% to Rs 714 on the BSE, while Dhampur Sugar Mills gained 8% to Rs 192 per share. Uttam Sugar gained 5% to Rs 310 per share. Triveni Engineering shares rose 4% to Rs 249, while Eid Parry gained over 3% to Rs 711.
Why are sugar prices rising?
1.) Festive period - India's sugar demand usually surges from August to November as the country celebrates festivals like Ganesh Chaturthi, Dussehra and Diwali, which leads to heightened demand for sweets, biscuits and other confectionery items.Also read: Giants on sale and minnows at premium. Where does value lie?
The Centre has cut the period for which sugar dealers can hold stock to 15 days and capped their holdings at 1,000 quintals, effective from October 15 to November 30, 2026. The curbs are meant to prevent hoarding and keep supplies moving during the festive season.
2.) Supply worries - A key trigger is the worsening supply outlook in Brazil, the world's largest sugar producer. The country has warned of a delay in the harvest amid adverse weather conditions. Adding to uncertainty, Brazil has suspended its bi-weekly harvest and production reports, leaving investors with limited visibility on the supply situation.
Supply concerns are not limited to Brazil. Intense heatwaves and El Nino conditions across the EU and the UK have added to fears of tighter supplies, with sugar output from the region trimmed to 14.98 million tonnes. In Asia, Thailand, the world's third-largest sugar producer, has cut its projected output by 15.6% to 9.5 million tonnes.
3.) From surplus to deficit - The global sugar market was expected to remain in surplus at the start of the year, but rising weather-related risks have shifted market expectations towards a potential supply deficit relative to demand.
According to Bloomberg, trader sentiment towards sugar has also turned more positive. CFTC data as of September 29 showed that net short positions in raw sugar had fallen to their lowest level in more than 21 months. This indicates that large speculators have significantly reduced their bets on a decline in sugar prices.
The biggest factor behind the recent rise in sugar prices is growing concern over global sugar supplies. Weather-related risks have put pressure on production and supply across major sugar-producing regions, strengthening market expectations that global sugar supplies this year could fall significantly short of initial estimates.
In Brazil, the world’s largest sugar producer, persistent heavy rainfall has disrupted the pace of sugarcane harvesting and milling. Green Pool Global has cut its sugar production estimate for the 2026/27 season in Central-South Brazil by 3%. The situation in Europe is also challenging. According to estimates from the EU Monitoring Agricultural Resources Unit, the region’s crop could be around 11% below the five-year average.
Govt on sugar ahead of festive demand
From October 15, sugar dealers will not be allowed to hold stocks for more than 15 days from the date of receipt. They will also be restricted to holding a maximum of 1,000 quintals at any location in the country.The revised norms are aimed at preventing unnecessary accumulation of sugar across the distribution chain and ensuring smoother movement of stocks from mills to dealers and ultimately to consumers.
The Government said the measures are intended to curb hoarding, discourage speculative trading and prevent dealers from building up excessive inventories. By restricting both the quantity and the duration for which sugar can be held, the Government aims to ensure adequate availability at reasonable prices.
Average retail sugar prices have declined 15% from their August peak, according to the Government, which expects prices to fall further as lower ex-mill prices are passed on to consumers.
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Ex-mill sugar prices have fallen around 28% and remained stable over the past three weeks. The Government attributed the decline to measures aimed at ensuring adequate availability and orderly movement of sugar.
Disclaimer: This article has been written by Veer Sharma, who is not a SEBI-registered Research Analyst or an Investment Adviser. Veer Sharma and his ‘relative(s)’ (as defined under Section 2(77) of the Companies Act, 2013) do not hold any financial interest in the companies mentioned in this article as of the date of publication. The views/recommendations mentioned in this article, wherever applicable, are those of the respective SEBI-registered Research Analyst/brokerage and have been reproduced/reported with due attribution. They should not be construed as the views or recommendations of The Economic Times Digital or the journalist. Readers are advised to consider the original research report and make their investment decisions based on their own assessment. Brokerage disclaimers here.
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