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Weekly Commodity Research Reports

Sugar Weekly from 04th February - 09th February 2013

Sugar production numbers released till Jan-end remains year on year higher, albeit the gap is closing. The production now is higher by 2% according to NFCSF and 3% according to ISMA. But higher it is. While the quarterly sale quota was reduced last week and the government also loosened the clause that if the quota is not sold in stipulated time frame the equivalent quantity would be forcefully diverted to PDS. There are two implications of this clause. If the penal clause is removed the quarterly quota announcement becomes redundant. This could be pre-cursor to further decontrol of the sector. But other, and of more immediate concern is the fact that the government was not able to lift this forcefully converted stocks in any case. The recent high court ruling had reduced the time frame for which the government can forcefully make mills to hold on to these unutilized stocks. This probably was the main reason why the prices have not taken cognizance of the announcement as it had not immediate implication on the prices.

Globally sugar remains in a bearish trend. Some experts at the Dubai conference are talking of raw sugar touching 16 cent per pound. Currently market is trapped in a bearish range and any upward correction in prices will face huge producers' selling pressure.

February 2013 is expected to trade in the range of 3050-3120. Selling on rally remains the strategy for the time being.

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