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ICICI Direct Report
Global sugar prices have crossed U.S. cents 20/pound while simultaneously domestic prices have also moved up to Rs 36/kg.
In our July 2021 sector report, we reiterated our positive stance on sugar prices, distillery capacity expansion and subsequent high earnings growth for next three years.
Our view on sugar prices has been materialising. We maintain our stance that the sugar industry would be able to export six to seven million tonnes of sugar in the 2021-22 sugar season without export subsidy given global sugar prices are higher than cost of production for Indian sugar companies.
This would lead sugar inventory levels to come down to below seven million tonnes by September 2022, keeping sugar prices firm (Rs 34-38/kg).
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