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Last Updated : Dec 03, 2015 12:08 PM IST | Source: Moneycontrol.com

Expect sugar to trade sideways to higher : Angel

According to Angel Commodities, expect sugar to trade sideways to higher due to good exports from the country as international prices have improved over the last 2 months. Moreover, expectation of sugar glut due to current crushing season may keep prices steady.


Angel Commodities report on Agri Commodities

Sugar

Sugar prices traded higher yesterday as market participants buy more anticipation of better export prospects and lower cane production. Sugar Dec futures closed 1.04 higher at Rs. 2,731 per quintal. The crushing operations of the current sugar season (SS 2015-16), which began late October/early November, have seen an encouraging but may slow down in coming months. Till Nov’15, sugar mills produced 7.61 lt as against 5.74 lt in the corresponding period last year, a rise of 33%.

Recently, government decided to pay a production subsidy of Rs 4.50 per quintal directly to cane farmers, which may reduce financial burden on mills. According to ICRA report, India's sugar output is estimated to decline by 4.62 per cent to 26.8 mt in the 2015-16 marketing year. Earlier, the government has made it mandatory to millers to export 4 mt in the current season, to liquidate surplus sugar stocks in the country.

Global Sugar Updates

Raw sugar futures on ICE falls yesterday pressured by technical resistance as well as expectations for a possible rise in exports from India, the world's second biggest grower. However, fresh weather update from Brazil is strongly in favor of the bulls with heavy rains forecast in early December over harvest areas in center-south Brazil, which will slow mills' pace of crushing and possibly lower the sugar content

USDA forecasts global sugar production for 2015/16 down 3 mt (raw value) at 172 mt with reductions in Brazil, India, the European Union, and Ukraine more than offsetting gains in Australia, Russia, and Turkey. Thus, global sugar output will fall for the fourth straight year in 2015/16, with Brazil's crop pegged down at 35 million tonnes and India down at 28.5 million tonnes. In Brazil, recent rains lower the sugar content of the cane, and gasoline price increase boosting demand prospects for cane-based ethanol than the sugar.

Outlook

We expect sugar to trade sideways to higher due to good exports from the country as international prices have improved over the last 2 months. Moreover, expectation of sugar glut due to current crushing season may keep prices steady.

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First Published on Dec 3, 2015 12:08 pm
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