Sugar stocks got a boost and rose up to 7% on Friday following the government’s recent announcement that India is planning to export 2 million tonnes of sugar to China from early 2019. With this step, India will resume exporting raw sugar to China after a decade. Shares of domestic sugar manufacturing companies like Dhampur Sugar Mills Ltd, Balrampur Chini Mills Ltd, Shakthi Sugars, Ugar Sugar Works Ltd, Dwarikesh Sugar Industries, Mawana Sugars and E.I.D-Parry (India) Ltd, among others, posted gains in the range of 3-7% following the report.
E.I.D-Parry (India) Ltd rallied higher by nearly 7% to a high of Rs 239 per share on the BSE today, while Sakthi Sugars share price rose by 4.8% to an intra-day high of Rs 14.45 per share. Dwarikesh Sugar Industries shares edged higher by 4.5%, Balrampur Chini Mills stock by 5.3%, Mawana Sugars by 4.09% and Dhampur Sugar Mills Ltd by 5.83%. Ugar Sugar Works Ltd posted the biggest intraday gain in a month, up 5% intra-day.
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According to a commerce ministry statement issued on Thursday, India is planning to export 2 million tonnes of sugar to China to cut trade deficit with the neighbouring country. “Export of raw sugar from India to China will begin early next year. A contract for exporting 15,000 tonnes of raw sugar has been entered to by the Indian Sugar Mills Association (ISMA) and COFCO, a Government of China run public sector company,” the statement said, adding that India plans to export 2 million tonnes of raw sugar to China beginning from next year.
The statement pointed out that raw sugar is the second product after non-basmati rice that China will import from India. “It is a move to reduce the $60 billion trade deficit that China has with India,” the statement said. The country’s export to China in 2017-18 amounted to $33 billion, while imports from China stood at $76.2 billion. While the production stood at a record 32.5 million tonnes in the 2017-18 marketing year, the output is estimated to be around the same level or slightly lower in the current marketing year.
The annual domestic demand of sugar is around 26 million tonnes. India has an opening stock of 10 million tonnes at the start of the current marketing year last month. The Indian government has asked sugar mills to mandatory export 5 million tonnes in 2018-19 to liquidate the surplus stock and has even announced some financial assistance to facilitate outward shipments. To boost exports, the government is also negotiating with many countries, including China and Indonesia.
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Source: Financial Express