India Sugar Regains On Short Covering.

Indian sugar futures took a smart recovery yesterday rebounding from previous losses on short covering.

Positive trend in international market—due to supply demand mismatch—lent support to the Indian market. However, the market sentiment remained weak on bumper sugar production forecast.

Spot markets witnessed subdued trading on poor demand from wholesalers and retailers. Spot market traders were cautious in trade anticipating likely government intervention to control higher food inflation.

Volumes were thin in February and March contract on subdued trade participation from traders and investors. Short covering can be witnessed with decline in open interest.

Spot prices fell by around `15-25 per quintal across major markets.

Outlook

The sugar futures are expected to resume its downtrend based on bearish fundamental factors. Domestic traders and investors are avoiding buying anticipating further decline in the prices in near term. Cane crushing is in full swing across the country.

Production is likely to surpass our consumption thus making country into surplus of sugar. Though sugar is likely to be surplus government is delaying taking decision on allowing export.

The central government will review the supply demand situation before permitting exports. Indian market is market is moving in opposite global market as domestic policies are restricting the rise in prices.

Spot markets are witnessing lackluster trade participation from wholesalers and retailers. Market participants are waiting for sales quota for February month.

The sugar production in 2010-11 season is likely to be around 24.5 million tons against 18.5 million tons produced last year.

Source : commodityonline.com