The move is the first in seven years due to a lack of rain, cutting cane yields.

Reuters citing a government source stated that New Delhi's primary focus is to fulfil local sugar requirements and produce ethanol from surplus sugarcane.

However, due to unfavourable weather conditions, the country will not have enough sugar for export in the upcoming season.

India allowed mills to export only 6.1 million tonnes of sugar during the current season to September 30, after shipping a record 11.1 million tonnes last season. In 2016, India imposed a 20% tax on sugar exports to curb overseas sales.

After the news was reported, investors’ interest shifted to sugar stocks, with all shares traded on three stock exchanges soaring on August 24, of which three out of five ticker symbols hit the ceiling prices.

Specifically, shares Thanh Thanh Cong – Bien Hoa JSC (SBT) and Lam Son Sugar JSC (LSS) traded on the Ho Chi Minh Stock Exchange (HoSE) jumped 7%, while Kon Tum Sugar (KTS) on the Hanoi Stock Exchange (HNX) logged the biggest daily gain of 10%.

The Son La Sugar JSC on HNX and Quang Ngai Sugar JSC (QNS) on UPCoM also surged 7.4% and 6.5%, respectively.

Despite the market correction in the last trading session of the week, sugar stocks still tasted sweet, with SBT, LSS and KTS up in a range of 0.6-5.3%.

For the week, sugar shares registered increases of 5-11.1%, of which KTS grew the most, up more than 11.1%.

Concerns about scarce supply weighed on global food security, pushing sugar prices to hover at 11-year highs.

The price of raw sugar in the US was last quoted at 24.83 cents per pound, a gain of 26.4% over the beginning of the year.

Higher sugar prices on the international market is one of the drivers boosting domestic sugar stocks.

According to the Vietnam Sugarcane Association (VSSA), domestic sugar production is expected to reach 871,000 tonnes, up 16.6% for the year 2022/23, while sugar prices are set to remain high and in line with the global sugar prices in 2023 as imported sugar accounts for two-thirds of the country’s sugar supply.

Meanwhile, a report from the US Department of Agriculture said that Vietnam’s sugar consumption in 2023 is estimated at nearly 2.4 million tonnes, an average of nearly 200,000 tonnes a month.

As a result, the amount of sugar produced domestically can only meet four months of consumption demand and the sugar import quota this year is about 319,070 tonnes.

This means domestic sugar outputs and officially imported sugar can only meet 50% of demand in 2023.

Therefore, the Government Office has just issued an express dispatch to the Ministry of Industry and Trade (MoIT) and the Ministry of Agriculture and Rural Development on proposal to purchase an additional 600,000 tonnes of sugar from international markets.

This will benefit domestic refineries that have to import raw sugar.

KB Securities Vietnam JSC (KBSC) forecasts that the price of cane sugar will continue to stay at a high level, supporting the growth momentum of sugar producers in the country and in the world before entering a clearer correction phase.

In a recent report, SSI Research also said that the price of refined sugar will remain around 20,000 VND per kg (0.83 USD per kg), up 12% year-on-year, starting the second quarter of 2023.

Anti-subsidy and anti-dumping policies applied to Thailand's sugar to protect domestic enterprises are other drivers contributing to long-term improvement of domestic sugar production and sugar prices.

Even though the Ministry of Finance is consulting on the excise tax on sugary drinks with the draft revised Law on Special Consumption Tax to be submitted to the National Assembly in May 2024, SSI Research believes that the excise tax will have little impact on domestic sugar consumption.

Therefore, it believes that business results of the sugar industry will develop positively in the future.

In four quarters of the fiscal year 2022/23, sugar producers posted mixed business results. In particular, Lam Son Sugar and Thanh Thanh Cong – Bien Hoa reported losses of 78% and 66% on-year, respectively, in their profit after tax.

On the contrary, Quang Ngai Sugar, Son La Sugar and Kon Tum Sugar all recorded strong growth of up to 620% year-on-year.

The fiscal year of the sugar industry starts from July 1 of the previous year to June 30 of the next year./. VNA