Sugar futures on the National Commodity and Derivatives Exchange are likely to trade flat next week after subdued demand for the sweetener from bulk consumers and as investors may cover short positions at lower levels, analysts said.
"Subdued demand for the sweetener in domestic market will pressurise the prices of sugar," said Ravi Shankar Pandey, research analyst with Karvy Comtrade.
Domestic demand for the sweetener has fallen as monsoon, which usually brings cold weather, has started in many areas, traders said.
Also, total sugar supply is expected to touch 38.4 million tons in 2015-16 after accounting for 10.4 million tons of carry-over stock, from the current season, according to estimates released by Indian Sugar Mills Association (ISMA).
Meanwhile, consumption on the other hand is seen at 25.2 million tons, leaving a huge surplus of 13.2 million tons in the new season.
However, sharp fall in sugar prices may cushioned on strong international factors, analysts said.
"Brazil sugar output is weak which is pushing global prices," Ajay Kumar Kedia, research analyst with Kedia Commodities.
Sugar mills in Brazil's center-south region crushed much less cane in the first half of July compared with a year earlier because of heavy rains over cane-growing areas, according to sugar-industry group Unica.
Mills in the region crushed 29.3 million tons of cane in the first half of this month, a decline of 29% from the same period a year earlier, according to Unica.
Global sugar production plummeted 43.5% to 1.4 million tons in the same period, and ethanol output dropped 23.5% to 1.4 billion litres.
Meanwhile, mounting arrears and surplus stocks of sugar forced sugar mills to sale their produce at depressed prices which accelerate the exportable supply due to lower price.
Total cane arrear has dropped a bit due to aggressive sale by domestic mills but total arrear still stood at 181.12 billion till mid June, as per government officials.
Moreover, the government plans to export 4 million tons of sugar during (Oct-Sep) 2015-16 season to support the domestic prices and help miller to pay arrears, government officials said.
The government may link the incentives with fair and remunerative price of cane and market price of sugar and try to cover the gap by a subsidy mechanism.
Raw sugar October contract on the Intercontinental Exchange (ICE) rose 0.53% to 11.31 cents per pound for the week ended Jul 31.
White sugar October contract on the London International Financial Futures and Optional Exchange (LIFFE) jumped 2.16% to $354.10 per ton for the week ended Jul 31.
Sugar is expected to find support at Rs 2,150 per quintal and resistance at Rs 2,300 per quintal next week, analysts said.
Sugar for October delivery traded in Rs 2,165-2,268 per quintal range in the past five trading session on the National Commodity & Derivatives Exchange.
No comments:
Post a Comment