NCDEX Sugar Settles Higher On Seasonal Demand

Sugar futures settled marginally higher by 0.4% on Monday on account of improved seasonal demand from the bulk manufacturers to meet summer season demand. Expectations that government may consider further exports of sugar taking into consideration higher output also lended support to the prices.

Government last week changed the release mechanism of non-levy quota from a monthly to quarterly basis from April 2012. For April-June 2012 non-levy quota is fixed at 45 lakh tonnes (excluding 1 lakh tn of carry over from last month, 12% lower compared to the same period last year.

Raw Sugar prices settled 0.6% lower on Monday while Liffe markets remained closed. In the global markets sugar traders are adopting wait and watch policy and are closely watching the developments in Brazilian sugar cane crop.

Domestic Production

As per the latest update by ISMA, India produced 23.2 mn tn sugar between October 01- March 31, up 13% from the year ago period. (Source: Reuters). ISMA has estimated sugar output in 2011-12 at 26 mn tn.

In the first half of the season, Maharashtra has produced 8.0 mln tn sugar, up 11.4% from a year ago, UP 6.6 mln tn, up 14.8% on year, while Karnataka produced 3.5 mln tn, up 16.2%. The association said it expects Maharashtra, UP and Karnataka to produce 9.0 mln tn, 6.8 mln tn and 3.8 mn tn sugar respectively, in 2011-12.

Exports

With the opening stocks of 6.8 mn tn, domestic sugar supplies are estimated at 32 mn tn against the domestic consumption of around 22.5- 23 mln tn. Thus, there is a wide scope for exports from India.

Minister’s panel allowed 1 mn tn of unrestricted white sugar exports under OGL on 26th March 2012. This takes total exports in the current season at 3 mn tn, in line with what industry expected.

The Food Ministry has issued an export order for more than 8.13 lakh tonnes of sugar, out of the second tranche of 10 lakh tonnes.

Global Sugar Updates

Brazil's 2012/13 center-south sugar cane crop that will begin crushing in weeks was forecasted at 33.8 million tonnes of sugar, up 9 percent from 31 million tonnes this season, according to data agro consultant.

Government’s crop supply agency, Conab, will make its first estimates for the crop on April 10.

In Quarterly Market Outlook, the International Sugar Organization has increased its forecast for the global surplus in 2011/12 to 5.17 million metric tonnes, compared with its projection of 4.46 million tonnes made in November.