Sugar prices witnessed very choppy trade on limited buying from whole sellers. However, ample supply across the spot markets weighed on sentiments.
Higher production estimates also pressurized the prices. Therefore, on cues from spot activity futures also traded on negative note.
Factors to watch for
Central Government has announced sugar quota for the month of October, 2011. Around 20 lakh tons (levy sugar 2.5 lakh tons and non-levy sugar 17.50 lakh tons) have been set as a total sales quota against 19.31 lakh tons in September in 2011
In EGOM meeting, sugar stock limits of 500 MT have been increased for a period of two months till November 30
According to First Advance Estimates, sugarcane production is estimated to be 342.20 million tonnes against 339.17 million tonnes in 2010-11
According to sources, till Sep. 16, 2011 sugarcane has been planted in 50-79 lakh hectare against 49.32 lakh hectares in same period last year up by 3%
Derivative Analysis (NCDEX October)
According to derivative analysis, prices, volumes and open interest have declined. It is a good indication that price decline is being caused by disgruntled long position holders being forced to liquidate their positions.
Technicians view this scenario as a strong position technically because the downtrend will end as all the sellers have sold their positions, creating fresh buying opportunity at lower levels.
Courtesy: Karvy Commtrade Ltd.
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