The Hindu Business Line : Uptrend in sugar stock prices

Sugar stocks seemed to have taken off after the Agriculture Minister was quoted to have said that the Government was examining ways to provide a little more monetary support to the industry, with a condition that mills would clear dues to the farmers.

The Government is in the process of evaluating the Sugarcane Control order and any change would need an amendment in it, the Minister was reported to have said. Mills may be allowed to produce ethanol directly from cane juice, instead of molasses, to lower dependence on sugar prices, he said. “The GoM has recommended production up to five per cent now and 10 per cent after October 2008. But ultimately it will have to be discussed with the Petroleum Ministry and oil marketing firms, because they are the only buyers in the country,” he said.

There has only been a price rise of Rs 25 per 100 kg on account of festival demand which will extend till Diwali, said Mr Ashokkumar Jain, President of the Bombay Sugar Merchants’ Association Ltd.

However, these announcements on the back of which the sugar stock surged by almost 20 per cent do not make much difference to the gloomy scenario surrounding the industry, he said. India does not have the technology to for direct conversion of sugarcane juice to ethanol, he added. Any infrastructure to be put in place for direct conversion would take at least two years, said Mr Praful Vithalani of Jagjivan Keshvaji & Co, wholesale sugar brokers.

In fact, there has been a fall of Rs 5 per quintal in the sugar prices on the projection of overwhelming opening stocks for the current as well as the following year, he said. “We are expected to have an opening stock of 10 million as on October 1 and 16 million tonnes as on October 1, 2008. Future prices in the domestic market have gone up on account of lack of availability of contract specified quality in the exchange warehouses, he said.

Bajaj Hindusthan share was up Rs. 31 or 21 per cent, to Rs 177.3, while Balrampur Chini advanced Rs 16 or 23.8 per cent to Rs 83.25. Shree Renuka Sugars jumped Rs 133 or 24 per cent to Rs. 683.5. Oudh Sugar shares rose 19.9 per cent to their highest in nearly four months at Rs 62.60.

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