Trends
Spot prices of Sugar remained steady to weak due to sluggish trade on Saturday.
Sugar futures settled range bound at Rs. 1707 per qtl on Saturday.
World raw sugar vaulted to five-month highs on ICE Futures U.S. Friday. ICE October world sugar settled up 20 points at 14.13 cents a pound.
Worried about firming sugar prices, the Centre is planning to make additional free sale quota (July- Sep) releases in order to calm down Sugar prices.
On 1st July, the Centre has released 30 lt (lakh tonnes) of sugar as the Free Sale Quota (FSQ) for the quarter July-September. This is lower than the 36 lt released for the same quarter of last year.
Fundamental Analysis
In the short term, Sugar prices are likely to be stable after the recent sharp rise.
Rainfall activity since the last night in Maharashtra may boost the sowing which was hampered during the last fortnight.
Sugar prices have gained around Rs 200/quintal during the last fortnight, therefore loading of sugar has sharply affected and only market sugar is being traded these days.
So far, sugar cane planting in the country has been lower at 43.2 lakh hectares, compared with 52.8 lakh hectares a year ago. This may support the prices in the coming days as lower acreage may revise the output further downward for the year 2008-09
Outlook
Firm international markets may keep Sugar futures firm for the intraday. In the short term, trend would depend on the rainfall activity in Maharashtra. On the international fronts, Brazil is likely to convert more than 65 % of its cane production towards Ethanol, thereby creating a global Sugar shortage in the medium to long term. This would support the international Sugar prices to remain firm. In the medium term, Indian Sugar futures are likely to remain bullish on Lower crop in Global as well Indian markets.
