Sugar
Sugar Mar. futures closed positive on yesterday largely due to good buying support make up for rising supplies. There are still huge stocks with the traders following persistent supply from the sugar mills against the regular demand. There is hope that the government might announce subsidy for raw sugar exports though ample supplies in the domestic market weighed on sentiment.
Sugar production has reached 13.5 million tonnes as on Jan 31 for the 2014-15 season, as against 11.71 million tonnes in the year-ago, a rise of 15%.
As per the revised forecast, Sugar mills expected to produce around 26 million tonnes in 2014-15 season ending September. Maharashtra production is projected to rise to 9.5 million tonnes from 7.7 million tonnes in the previous year. ISMA projected the annual domestic demand of sugar at 24.8 million tonnes.
Food Ministry approves proposal to increase export subsidy on raw sugar to Rs 4,000/tonne but to execute, the proposal has to be approved by the Union Cabinet. However, the Cabinet Committee on Economic Affairs (CCEA) approved a proposal to allow states to fix the retail price of sugar sold through the Public Distribution System (PDS).
Global Sugar Updates
Oil-producing nations from Iran to Nigeria and Russia are cutting sugar imports as lower crude prices curb their ability to obtain dollars to make payment according to McGraw-Hill Financial Inc.
Rabobank has forecasted a decline of 1.8 million tonnes of global sugar supplies for 2014/15. In Australia, drier weather is likely to result in lower sugar production in the year ahead due to the prospect of an El Nino weather event. China's sugar production predicted to decline 12% against the backdrop of a 4% rise in demand.
According to ABARE, Dec quarterly forecast, Australian raw sugar exports would rise 6 % in 2014–15 to 3.3 mt, up 7%, with higher volumes more than offsetting the impact of lower prices.
According to International Sugar Organization, the world stock has reached 76.6 mn tonnes as of the end of 2015-16, equivalent to 42.8% of world annual consumption.
Outlook
Sugar futures may trade on a mixed note on anticipation of announcing the export subsidy by the government but the ample supplies may pressurize the prices.
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