Sugar Trading in India

Did you know that modern word 'sugar' is derived from the word Sarkara? It is believed that India has been the home for sugarcane as well as sugar manufacture.

India is the world's largest sugar consumer, accounting for 15% of global consumption.

In India sugar production follows a 5-7 year cycle. Sugar production increases over a 3-4 year period, reaches a high, which in turn, results in lower sugar prices. Lower sugar price and increased sugarcane arrears results in lower sugarcane production for the next 2-3 years. And the sugar prices shoot up and the area under sugarcane rises during the next season. As a result Sugar in India is also a huge 'swing producer' - severe year-to-year production fluctuations affects its trade status and in turn global prices of sugar.

The Indian sugar industry remains the second largest rural agro-industry after cotton textiles. With over 600 operating sugar mills across India, about 50 million sugarcane farmers and a large number of agricultural labourers are involved in sugarcane cultivation and ancillary activities; the industry remains a potent rural economy driver.

Sugar trading in India is not easy as its price affects the budget of common man in India hence; it is a politically sensitive commodity. Currently all aspects of sugar industry be it production consumption or sales is controlled. However growing market pressure has made government look into partially decontrol the industry.

What makes Sugar good investment?

Sugar is a broad commodity; it is produced and consumed across the country.
The consumption is by wide spectrum of end users, ranging from an individual to a cola maker to a street based sweet maker.
Sugar futures are actively traded in Indian derivative markets that allow for risk management to the producers as well as consumers.
By-products of Sugar molasses and bagasse are used in producing alcohol (rectified spirits), ethanol and energy generation. All industries are growing albeit for different reasons.

Why is Sugar a wise investment for an Indian trader?

Due to the cyclical pattern of the Sugarcane production, every couple of years, India is either a very large exporter or a very large importer in the world. This makes India influence the global prices and in turn be influenced by them.
Indian price movements are also volatile in response to the changing demand supply scenarios. Price Risk management has made many sugar mills hedge their positions on the commodity exchanges.
Sugar being a basic consumption commodity will grow steadily along with the growing economy and as the standard of living in India improves.

How can Kotak Commodity help me invest in Sugar?

The Kotak Commodity Gateway Account will give you access to research and trading facilities to conduct sugar trading in India. While SMS alerts and Call & Trade will provide you regular updates on sugar prices in India, our expert research reports will help you make informed decisions. Our brokerage rates are attractive. The best part is that our Gateway account is a lifetime free trading account.

If you are new to online commodity trading, we offer an easy way to understand how to trade commodities. To learn more about Kotak Commodity Gateway Account, please click here.

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