Fundamental Analysis Spot Sugar prices which had fallen by almost Rs. 40 per qtl had shown some signs of recovery ahead of a High Court hearing on cane purchase price in Uttar Pradesh. However, Sugar prices settled lower on Wednesday due to rising delivery pressure for the near month contract which would expire today.
We are not expecting a firm outcome from the hearing, which may delay large-scale cane crushing in the state, the country's second-biggest producer, leading to a shortfall in the sweetener. This has led to speculative buying.
The global sugar deficit in 2008-09 may be smaller than the earlier forecast of 3.90 million tonnes as sliding crude oil prices may encourage many Brazilian mills to produce sugar than diverting the crop for ethanol.
In the medium term, despite huge stockpile of sugar, the global supply outlook will tighten into next year due to rain-induced crop problems in Brazil and falling output in India.
Technical Analysis Sugar prices (NCDEX Dec 08 Contract) close at Rs. 1777 per quintal on Wednesday lower as compared to Rs. 1794 per qtl during the previous day.
Prices closed below its 5 days, 20 days SMA and 65 days indicating a down trend. RSI at 39.74 is in the neutral zone.
Sugar futures are likely to remain sideways for the intraday with the support and resistance.
Outlook Indian sugar futures might remain under pressure during the first half of the trading session due to delivery pressure. However, it may recover the cane prices issue has delayed crushing in the state and any further delay may further lower the sugar output as cane may be diverted for use in other related industry. Expectations of lower Sugar production by almost 20% due to decline in sowing (17% lower) may support the prices in the medium term.
Courtesy: Angel Commodities
