Sugar stocks in a sweet spot, El Nino arrival sparks shortage fears
The US National Oceanic and Atmospheric Administration’s Climate Prediction Center said on June 8 that El Nino has kicked off. The weather pattern has often been associated with inadequate monsoon rains in India, the world’s biggest sugar producer
The share price of sugar producers gained on June 9 morning in India, the world’s biggest producer of the sweetener, following a rally in US sugar futures as the arrival of El Nino sparked fears of a shortage.
El Nino — characterized by warmer ocean temperatures across the Pacific —impacts weather patterns around the world. It has been often linked to deficient monsoon rains in India.
The planet-warming weather pattern is likely to impact major sugar-producing countries like India, Brazil and Thailand. A fall in production will create supply shortage, increasing the price of the sweetener, which pushed up sugar stocks.
US sugar futures were up 4 percent on June 8 at $25.48.
The US National Oceanic and Atmospheric Administration’s Climate Prediction Center on June 8 said that El Nino had kicked off and would bring hotter temperatures in the world.
“Depending on its strength, El Nino can cause a range of impacts, such as increasing the risk of heavy rainfall and droughts in certain locations around the world,” said Michelle L’Heureux, climate scientist at the Climate Prediction Center.
India’s sugar production fell 6 percent to 311 lakh tonnes till April 15 of the 2022-23 marketing year ending September, according to the Indian Sugar Mills Association. A further decline will push sugar prices even higher.
At 11.37 am, Dhampur Sugar Mills Ltd was up 3.5 percent at Rs 277.65 on the National Stock Exchange (NSE). Balrampur Chini Mills Ltd. was up 2.45 percent at Rs 405.25, Mawana Sugars Ltd was up 2.82 percent at Rs 98.40 and Dalmia Bharat Sugar and Industries Ltd gained 2.3 percent at Rs 372.55 on the NSE.
(with agency inputs)
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