Sugar Tumbles On Ample Supply .

Sugar futures extended losses of the previous wee4k and ended 2.90°o lower ww. Spot prices however settled 1.97% higher on account of slight recovery in the demand from the local stockists.

The Ministry or Food & Public Distribution has decided to make available 19.o7 Iakh tons of sugar for April 2o1n1, which it feels would be sufficient to meet the internal demand for the commodity during the month.

An official press release said this would include 2.o7 l.akh tonnes of levy sugar and non-levy sugar of 17 lakh tonnes. The non-levy sugar would include normal quota or 15.8o lakh tonnes, 02o lakh tonnes or white/refined sugar processed out of imported raw sugar during February 2o1 7 and I lakh tonne or carryover quantity or unsold/undispatched non-levy sugar during March 2o11.

Absence of a formal notification with respect to exports under OGL from the government is keeping the millers and exporters worried. Union ministry of rood and public distribution has directed the Maharastra government to set up export cell to monitor exports.

ICE Raw Sugar futures slipped further on expectations the supplies globally would start increasing once the Brazils Sugar harvest starts in full swing. Harvesting in Brazil commences in April.

Brazil wants to increase regulation or the domestic ethanol market to ensure output, signaling a move that could have major implications for global sugar supplies. Brazil government is considering of imposing 4°o to 5°e tax on sugar exports.

Dom Pricing, Production & Consumption

India has raised the price sugar mills must pay to purchase cane from farmers to 14s rupees ($3.2o) per 1oo kilograms in the next season that begins from Oct. 1, government sources said during the last week. In the current season to September, the cane purchase price had been fixed at 139.12 rupees per 1oo kgs.

Sugar production in UP is expected far below the 7 million tonnes estimated at the beginning or the season. As on 22’ March, 2o11, s.51 million tonne sugar had been produced UP.

The ISO, in a quarterly update, projected a global surplus in October 2o1o to September 2o1n1 of just 196,o00 tonnes, well down from the 1.29 million seen in the last update in November 2010.CIlobal consumption in 2010-11 was revised up by 180,ooo tonnes to 167.849 million tonnes.

Outlook

Sugar prices may trade down in the coming days as sufficient stocks at the domestic mandi may pressurize prices. No official notification with respect to exports Is also underpinning the sentiments.

However, Sugar pries may start recovering once the government approves the applications for exports of Sugar. Also, increase in stock limits and reintroduction or 6o°c import duty on Sugar may provide further support to the prices, Prices may gain by Rs. 100-150 per qtl w the coming weeks.

In the medium term prices would depend on the permissible sugar exports by India and the final estimates of Sugar output. Prices are expected to trade in the range of Rs. 26o0- Rs. 29o0 per qtl levels.

Source : commodityonline.com