Sugar Weakens on Subdued Demand

Lacklustre demand from the local buyers coupled with higher sugar quota for the month of November 2011 weighed on the prices in the previous week. Sugar spot prices and Futures settled 0.64% and 0.94% lower respectively w-w.

Government has released higher sugar quota of 19.15 lakh tonne (levy sugar -2.14 lakh tonne and non levy sugar- 17 lakh tonne) for the month of November 2011.

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 seasons at 26 mln tonnes. (Factiva)

ICE Raw Sugar Futures settled 2.58% higher due to positive sentiments created by possible steps taken by the Euro leaders to solve the Greek debt crisis. However, Liffe sugar ended 1.05% lower.

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 3 percent to fall at 27.7 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.