Sugar stocks led by Balrampur, Shree Renuka extend gains for second day, ISMA dispels shortage scare

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Shares of sugar mills extended gains on March 19 to rise up to 7 percent after a significant rally in the previous trading session, which was fuelled by industry estimates of a production shortfall, a concern that has been dispelled by industry body ISMA.Millers' association ISMA has dispelled concerns of a sugar shortage this season and said that there would be stable and sufficient availability of sugar to meet domestic demand during 2024-2025 market season (October-September).Notwithstanding, shares of Uttam Sugar Mills were trading over 7 percent higher at Rs 247 per share. Balrampur Chini Mills shares jumped over 6 percent to trade 52 percent higher than its 52-week low. Shree Renuka Sugars shares meanwhile jumped nearly 5 percent.Other sugar stocks which recorded strong gains included Dalmia Bharat (over 5 percent up), Sakthi Sugars (over 5 percent up), Bajaj Hindusthan Sugar (nearly 5 percent up), Mawana Sugars (nearly 5 percent up), Dwarikesh Sugar Industries (nearly 5 percent up), Rana Sugars (nearly 4 percent up), Dhampur Sugar Mills (over 3 percent up), EID Parry India (nearly 3 percent up) and more.What Spurred a Rally in Sugar StocksThe rise in the sugar mill share prices comes as industry estimates indicate that sugar output in two of the world's largest producers - India and Brazil - may fall short of expectations. In January, the Indian Sugar and Bio-energy Manufacturers Association (ISMA) had lowered its sugar production forecast for the 2024-2025 season to 26.4 million metric tonne (MMT) from its previous estimate of 27.27 MMT.Fear of a tighter supply and a sustained demand may lead to higher sugar prices, benefitting sugar mills. After hitting a three-week high on March 18, the most actively traded raw sugar contract in New York has continued to extend gains.Additionally, the International Sugar Organization (ISO) has raised its forecast of a global sugar deficit for 2024-25 season to -4.88 MMT from earlier estimate of -2.51 MMT in November. This tightening of supply is in sharp contrast to a surplus of 1.31 MMT recorded during 2023-24 season.The prolonged dry weather in Brazil has further added to the supply concerns. Conab, Brazil's government crop forecasting agency, had cut its sugar production estimate for the 2024-25 season to 44 MMT, down from its earlier projection of 46 MMT, citing lower sugarcane yields due to drought and exce...

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