Sugar and rice stocks up on fresh export permission

The government’s decision to allow exports of additional sugar and non-basmati rice lifted the share price of companies in these segments, on Wednesday. Both rice and sugar companies’ stocks jumped five per cent and 6.6 per cent respectively.

The share price of Ponni Sugars jumped by 6.6 per cent to close at Rs 111.10 while Simbhaoli Sugars, Bajaj Hindusthan and Shree Renuka Sugars’ stocks firmed up by 2.41 per cent, 1.11 per cent and 0.5 per cent to close at Rs 38.25, Rs 35.54 and Rs 40.29 a share, respectively.

In the rice segment, the stock price of Kohinoor Foods jumped by 4.4 per cent to close at Rs 42.80. The share price of Usher Agro, KRBL, LT Foods and Chaman Lal Setia Exports also rose 3.8 per cent, 2.8 per cent 2.3 per cent and 1.5 per cent to Rs 53.10, Rs 20.70, Rs 46.95 and Rs 27.05, respectively.

Experts believe the government has provided a big relief to the industry by allowing additional export of one million tonnes (mt) of sugar and two mt of non-basmati rice. It was decided in a meeting of the Empowered Group of Ministers (EGoM) on food. The EGoM had said the exportable quantity will not impact the country’s required consumption due to excessive production in the last couple of years.

The requirement of additional rice to emerge with the introduction of the Food Security Bill is also expected to be adequately met.

This decision paves way for more export of both basmati and non-basmati rice. An analyst said both the steps would lead to more export of rice from the country, thereby helping in arresting the sharp fall in prices due to bumper harvest.

The country had shipped 2.2 mt of the grain in the last financial year. After on Wednesday’s decision, the government has allowed the export of two mt of sugar in the 2011-2012 crop marketing season that started in October.

The panel of ministers also opened export of grains to Bangladesh through the land route and cleared a proposal to create two mt of additional storage space through modern silos.

However, the decision taken by the EGoM on sugar would be announced only after approval from the Election Commission as Assembly elections are being held in Uttar Pradesh, the country’s second largest sugar producing state.

India's sugar production in 2011-2012 is expected to be around 26 mt as against the annual domestic demand of 22 mt.

India, the world's second largest sugar producer and biggest consumer, had exported 2.6 mt of the sweetener in the 2010-11 marketing year.