Sugar Edges Higher on Seasonal Demand

Sugar Futures settled 1.50% higher w-w due to buying by the market participants. Spot prices also settled on positive note due to demand from the local buyers ahead of festivals.

The government will consider permitting sugar exports for the current marketing year, which started this month, only after the Diwali festival. In the 2010-11 marketing year (October-September), the government had allowed exports of 2.6 million tonnes of sugar.

According to ISMA (Indian Sugar Mills Association), India Oct 1 sugar opening stocks are seen at 6 mln tn vs 4.98 mln yr ago. Also, it had maintained its initial Sugar output estimate for the 2011-12 season at 26 mln tonnes. (Factiva)

ICE Raw Sugar Futures settled lower by 1.19% on account of long liquidation. However, Liffe sugar settled 3.43% higher on prices supportive fundamentals in the two largest exporting nations. After repeated downward revisions in the Brazilian Sugar output, Sugarcane crop in Thailand is also expected to get damaged due to floods which would reduce the global availability.

Domestic Sugar updates

India is expected to produce highest sugar output in last 4 years due to higher area under cultivation amidst favorable weather.

According to the first advance estimates, Sugarcane production is estimated higher by 0.9% at 34.22 mt for the coming season 2011-12 starting October 1, 2011. ISMA has projected sugar production at 26 million tonnes for 2011-12.

With the opening stocks of 6 million tonnes, domestic Sugar supplies are estimated at 32 million tonnes against the domestic consumption of around 23 million tonnes. Thus there is a wide scope for exports from India.

Global Sugar Updates

Brazil's main sugar industry group Unica showed production down 4 percent to fall at 26 million tonnes. The crop will decline for the first time in 11 years due to bad weather during crop development and poor yields from aging cane fields have led Unica to cut its output forecasts. (12th October 2011).

China, the world's largest sugar consumer, has imported 1.6 million tons of sugar in the first 11 months of 2011, with preliminary data for the full year likely to be issued around October 10.