REPEAT/SUGAR WEEKLY: May trade flat on weak demand, govt sops

 

  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 the government is likely to bring in rules to make it compulsory for sugar mills to export surplus sugar, 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 as the government is likely to bring in rules to make it compulsory for sugar mills to export surplus sugar, analysts said.

  "Export of excess sugar will help to reduce the surplus output as well as to curb prices," said Abhijeet Banerjee, research analyst with Religare Commodities.

   Government may make it compulsory for the sugar mills to export a fixed quantity of sugar to solve the problem of glut and ease industry's liquidity problem, reported Reuters Wednesday.

  India is likely to bring in rules to make it compulsory for sugar mills to export million of tons of surplus supplies to support local price, said Reuters quoting sources.

  A final decision rests with Prime Minister Narendra Modi, who discussed the politically sensitive issue at a weekend meeting with ministers, officials and sugar mill bosses, said the two government sources.

  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.

  Raw sugar October contract on the Intercontinental Exchange (ICE) slumped 2.82% to 10.85 cents per pound for the week ended Aug 6.

  White sugar October contract on the London International Financial Futures and Optional Exchange (LIFFE) fell 0.72% to $346.90 per ton for the week ended Aug 6.

  Sugar is expected to find support at Rs 2,150 per quintal and resistance at Rs 2,450 per quintal next week, analysts said.

  Sugar for October delivery traded in Rs 2,220-2,335 per quintal range in the past five trading session on the National Commodity & Derivatives Exchange.

 

Base Metal Outlook: Copper seen flat Mon on demand worries, short covering

 

  : Copper may open flat Monday on demand worries from China following weaker than expected economic data and  buying at lower level after prices dropped to five-year low on Friday, said analysts.

  "Base metals will fall on China demand worries while short covering will cushion the prices at lower level," said Ajay Kumar Kedia an analyst with Kedia Commodities.

  Base metals will be down after a government data indicated a slowdown in the Chinese economy.

  China imports fell 8.1% in July compared to analysts' estimate of 8.1% fall and 6.1% de-growth for the same period a year earlier, data by the National Bureau Statistics of China showed.

  Exports in China also declined to 8.3% for the same period compared to 2.8% growth a year ago.

  Prices of red metal will also be under pressure after China Jan-Jul copper, copper product imports fell 9.5% to 2.59 million tons on year, government data showed.

  China is the world's largest consumer of copper accounting for about 40% of total global demand and major consumer of other industrial metals.

   However, sharp fall in the red metal prices will be cushioned as investors are likely to buy back oversold position after prices dropped to five-year low on Friday, said analysts.

  On Friday, copper for August delivery at the close of trades slipped 0.43% to Rs 329.70 per kilogram on the MCX, at its lowest level since July 23, 2010.

  Red metal prices will also be under pressure on higher stockpiles of the metal on LME, indicating oversupply situation, said analysts.

  Copper stockpiles rose by 725 tons to 352,325 tons, LME data showed on Friday, its highest level since January 2014.

   On Friday, copper for August delivery at the close of trades slumped 0.43% to Rs 329.70 per kilogram on the MCX.

  MCX copper prices are likely to find support at Rs 324.6 per kilograms while resistance is seen at Rs 335.2 per kilograms today.

  London Metal Exchange (LME) copper prices may open at $ 5,147.50 per MT and find support at $5,043 MT and resistance at $5,271 per MT.

  MCX aluminium for July delivery at close of trades dropped 0.19% to Rs 100.35 per kilograms on the MCX, at its lowest level since May 23, 2012.  

   MCX aluminium prices are likely to find support at Rs 99.3 per kilograms while resistance is seen at Rs 102.1 per kilograms today.

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