Indian Sugar Stocks Rally on Global Supply Concerns and Price Surges

Shares of Indian sugar companies, including Balrampur Chini Mills, Dhampur Sugar, and Dalmia Bharat, have risen up to 8% over two days, extending gains as Indian sugar prices reached a seven-year high of Rs 4,400-4,800 per quintal.

This rally follows a surge in global sugar prices, with US raw sugar exceeding $16/lb and London White Sugar climbing to a 15-month high above $500 a tonne. Key factors driving the market include a worsening supply outlook in Brazil, the world's largest sugar producer, due to adverse weather and a shift towards ethanol production.

Brazil has increased its mandatory ethanol blending target to 32%. Supply concerns are amplified by heatwaves and El Nino conditions in the EU and UK, trimming their sugar output. Thailand, the third-largest producer, has cut its projected output by 15.6%. India, the second-largest producer, is also anticipating lower production and is enforcing hoarding limits. Global deficit estimates indicate a tighter market.