| Date: |
14-07-2015 |
| Subject: |
Expect Sugar to trade sideways: Angel Commodities |
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Sugar Oct contract traded on negative note and closed down 1.90 per cent at Rs 2219 per quintal due to heavy selling by millers to clear arrears. The price in the spot market is unchanged since long, which indicates there is more than a sufficient stock with the traders. Meanwhile, government permitted export of an additional 2,095 tonnes of raw sugar to the USA under the tariff rate quota (TRQ).
India's sugar production is estimated to touch all time high of 28.3 million tonnes (MT) in 2014-15. Mills have exported only 4.6 lakh tonne of sugar (both raw and refined) until the first week of May as per ISMA. India produced 27.96 million tonnes up to May 31, compared with 24.05 mt a year earlier, according to the ISMA. Recently, government has approved Rs. 6000 Cr. loan package to sugar mills to clear farmer’s dues. Earlier, government increased import duty to 40% from earlier 25% to curb cheap imports to support domestic mills.
Global Sugar Updates
According to USDA, global production in 2015/16 to be down by 10 lakh tons to 1734 lakh tons which is 4th consecution yearly decline while the consumptions will equal production for first time. The U.S. Climate Prediction Center extended its forecast for El Nino to have a 90% chance of lasting well into 2016, which could reduce sugar coming from Thailand. Meanwhile, Brazilian produced 6.75m tonnes of sugar in 2015-16 up to June 16 – down from 7.76m tonnes at the same time of last season.
Outlook
We expect sugar to trade sideways to down as millers are selling heavily in the domestic market against selective buying. Sugar may be trading range bound (2100 – 2200) on sufficient supplies in the market.
Source : moneycontrol.com
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