Domestic Sugar Stocks Outperform Global Peers But Trend Reverses For Prices

02.08.2016

Domestic Sugar Stocks Outperform Global Peers

Shares of Indian sugar companies, like Dhampur Sugars and Balrampur Chini have surged over the last 12 months, delivering higher returns when compared with some of their global peers, like Brazil based Biosev AG Tereos Internacianol and Cosan SA.

But Domestic Sugar Prices Trail International Prices

But in the same period, the gains on domestic sugar prices have trailed those in international markets. The price of sugar futures contracts on the National Commodities & Derivatives Exchange gained 55% in last 1 year. Sugar futures trading on the International Continental Exchange have risen nearly 60%.

It must be noted that the Government of India has imposed a 20% export duty on sugar which has resulted in excess supply in the domestic market. This is to limit the dramatic rise in sugar prices and to reduce volatility. This is one reason why domestic sugar prices have been trailing international prices.

In summary, sugar prices in India have not yet caught up with global prices but gains in shares of Indian sugar companies have outpaced global peers.



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