As the export ban causes panic selling, sugar stocks are down for a third day; Dhampur sugar is down

After the government announced a cap on sugar exports at 10 million tonnes contracted for, with no exports between June 1 and October 31, 2022 (except under restrictive conditions), there was a significant shift to the downside in the industry's perspective, and sugar stocks were trading lower for the third day in a row. Share prices in sugar stocks have fallen precipitously over the past three days due to panic selling.

Top Gainers & Losers

Among the top gainers were Uttam Sugar Mills (up 1.83%), Dharani Sugars & Chemicals (up 0.87%), Sakthi Sugars (up 0.64%), Kothari Sugars & Chemicals (up 0.59%), EID Parry (up 0.57%), BAJAJ HIND (up 0.37%), Ponni Sugars (Erode) (up 0.28%), and Rana Sugars (up 0.18%). Among the top losers were Simbhaoli Sugars (down 4.97%), Ugar Sugar Works (down 4.96%), Mawana Sugars (down 4.73%), Dhampur Sugar Mills (down 4.03%), Dalmia Bharat Sugar & Industries (down 3.28%), AVADHSUGAR (down 3.00%), MAGADHSUGAR (down 2.99%), Vishwaraj Sugar Industries (down 1.39%), and Dwarikesh Sugar Industries

Why Are Sugar Stocks Under Pressure?

The Ministry of Commerce and Industry reports that beginning on 1 June 2022, sugar exports will fall under the "restricted" category, with a 10 million-ton cap in place until the conclusion of the season on 31 October 2022. Until October 31, 2022, or until further instructions, sugar (including raw, refined, and white sugar) may only be exported by sugar mills and traders that have appropriate government licenses. Additionally, shipments to the European Union (EU) and the United States that are subject to CXL and TRQ (Tariff-Rate Quota) quotas are exempt from the restriction.

India had intended to limit sugar exports to 8 million tonnes, but after output projections were revised upward, the government opted to let mills sell some more sugar. According to the government, India has constantly generated excess sugar since 2010–11, more than meeting domestic demand.

According to the commerce ministry, India's sugar exports climbed from $1.17 billion (about Rs 9,000 crore) in 2013–14 to $4.6 billion (roughly Rs 35,000 crore) in 2021–22. According to the report, India exported sugar to 121 nations worldwide.

According to analysts, a pattern of rising inflation has made traders fearful, and news of sugar export limitations has caused sugar stocks to drop precipitously.

Sugar stocks are under the spotlight because the Indian government placed sugar export in a restricted category starting on June 1, 2022, according to Raj Vyas, Portfolio Manager at Teji Mandi. This is regarded as a preventative action to protect the nation's food supplies. So,

According to the administration's announcement, sugar mills must now request authorization from the government to export sugar. In any event, exports were not anticipated to exceed 10 million tonnes, so it is encouraging that the government will be content even with an inventory level of 6 million tonnes by the end of September 2022. Since there are only prospective export limitations and no export ban, we think the union government made a wise decision. We should not see any revenue damage as a result.

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