Sugar stocks soar up to 12% as govt allows sugarcane juice, syrup for ethanol production

Sugar stocks climbed sharply on the bourses in early trade on August 30, jumping up to 12%, in the backdrop of the government permitting the use of sugarcane juice and syrup for ethanol production.

Sakthi Sugars rose 7.05% to trade at ₹41.13 per share, whereas Dwarikesh Sugar climbed 5.75% to ₹77.82. Avadh Sugar & Energy surged 6.59% to trade at ₹753.45 apiece at 9:55 am.

Boost to ethanol production

The government on Thursday permitted the use of sugarcane juice and sugar syrup for ethanol production in the 2024-25 ethanol supply year (ESY), reversing last year's ban.

In December 2023, the government prohibited the use of sugarcane juice or sugar syrup for ethanol production in the 2023-24 ESY (December-November) to ensure adequate sugar availability for domestic consumption and keep prices in check.

"Sugar mills and distilleries are allowed to produce ethanol from sugarcane juice/sugar syrup, B-Heavy molasses as well as C-Heavy molasses for ESY 2024-25 as per the agreement/allocation with OMCs (oil marketing companies)," the food ministry order said.

The Food Ministry and Petroleum and Natural Gas Ministry will periodically review the diversion of sugar for ethanol production vis-a-vis sugar production in the country to ensure year-round availability of sugar for domestic consumption, it added.

Official data shows ethanol blending in India has reached 13.3% by July of the current season, up from 12.6% during the 2022-23 season.

Currently, the country's total ethanol production capacity stands at 1,589 crore litres. Of this, OMCs purchased 505 crore litres of ethanol for blending purposes during the 2023-24 season.

The government aims to achieve 20% ethanol blending target by 2025-26. Notably, India is the world's second largest sugar producing country after Brazil.