Sugar stocks have stolen the spotlight on Dalal Street with sweet returns of over 70% in the last month. Stock prices of Dhampur Sugar Mills, Dwarikesh Sugar Industries and Triveni Engineering have zoomed in the range of 70-75%, as compared to a 2% return on the benchmark index.
So, why is sugar the flavor of the month? Brazil and Thailand, the two largest sugar exporters in the world, are expected to witness lower production pushing global sugar prices higher ahead of the peak summer demand. Cane supplies are already tight due to a severe drought that’s been ravaging yields in Brazil. Cane-crushing dropped 30% in the first half of April .
Add to that the demand from the ethanol industry is also keeping prices elevated in the global market. In domestic market prices have moved up from Rs 30/kg to Rs 33-34/kg in the past 4 months and analysts expect prices to rise further from here.