Sugar futures in NCDEX ended up for a second day on Tuesday after a delay in crushing of new crop cane triggered short covering, Spot prices in Maharashtra, the top sugar producer, ended up 0.17 percent to 1,723.35 rupees.

Mills in the northern state of Uttar Pradesh, the second-largest sugar producer, have put off cane crushing to early November after the government failed to fix the minimum price for cane, a top UP Sugar Mills Association official said. In the western state of Maharashtra, the top producer, the crushing has been delayed because of rains which make movement of cane difficult. The crushing for the crop year that began on Oct. 1 was scheduled to start this week.

Sugar prices in Muzaffarnagar mandi declined by Rs.2.2 per quintal to trade at Rs.1, 894.60 per quintal yesterday. Prices decreased due to increased selling by millers and stockiest amid reduced off take by local parties and bulk consumers. According to market participants, there are plenty of sugar stocks to meet the ongoing festival demand. Demand from other states continues to remain weak. Arrivals were reported at around 1,000 to 1,500 quintals

Influencing Factors:

Moderate spot market
Short covering
Rains delayed the start of crushing of cane
Enough stocks to meet festival demand
Government would raise supplies for the December quarter
India's sugarcane area was down 17% on year, at 4.42 million hectares,
India has extended the validity period to sell September free sale sugar quota up to Oct. 15.
The ISO forecast a world sugar deficit of 3.90 mln tonnes in 2008/09 compared with a surplus of 7.25 mln in 2007/08 Exports are expected to increase to 30 lakh tonnes compared to about 17 lakh tonnes in the previous year.

Technical Outlook

Technically Sugarm200 October closed below 9 day EMA and above 21 day EMA.

Today’s Recommendation

NCDEX SugarS200 October buy above 1705 SL below 1691, targets 1714, 1720, 1726

Courtesy: JRG Wealth Management