Stock Market: Govt Approves 10 Lakh Metric Tons of Sugar Production, Know Potential Reasons

Stock Market News: Sugar stocks have recently become a hot topic in the market, with businesses like Balrampur Sugar, Sri Renuka Sugar, Dalmia Sugar, Uttam Sugar, and KCP Sugar seeing considerable increase. The increase is ascribed to the national government's approval on January 19, 2025, of 10 lakh metric tons of sugar output, while an operational notification is still pending. According to media reports, this statement has sparked confidence in the sugar sector, as it is expected to clarify policy, output volume, allocation, and associated conditions. This decision is expected to assist sugar producers in clearing inventory, improving their financial condition, and achieving better prices for their products, thereby increasing profitability.

Sharp Decline in Sugar Production

The Indian Sugar Mills Association (ISMA) had previously requested approval for 20 lakh metric tons of sugar production, but observed a 17% drop in output by December 15, 2024, owing mostly to lower production in Maharashtra. Sugar production has dropped drastically compared to the previous year, by 61.3%, from 74.5 lakh metric tons to 3.9 lakh tonnes. This reduction is due in part to rising ethanol use, which was prompted by the government's decision to boost ethanol prices in August 2024. Furthermore, an October order mandating sugar mills to link API systems for data sharing, with the danger of sugar quota suspension for noncompliance, has had a significant influence on the business. These initiatives are intended to improve the sector and mark an important milestone for sugar companies and producers.