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India Sugar Outlook 2016 onwards - A Pictorial Representation

Last few months have brought some cheer back to Sugar Industry as well as traders. After a massive fall in prices now finally some recovery is being made & this looks to be a more sustainable and realistic journey.

Lets start with World Sugar Balance and how this is playing its part in overall recovery in Sugar prices

World production has rather remained very flat and recent decline in Brazilian production put extra pressure on overall availability. Ending Stocks are likely to be reduced to 41mmt a clear 10%+ cut since 2013-14. 

Globally Sugar prices have remained subdued for a very long time and only recently we are seeing some green shoots. Our domestic prices have always been higher compared to international rates.

This was one of the price reason why India was out of International market for such a long time.  

Now if we look at Domestic Scenario I see tides are turning towards a bull market or atleast non-bear market, Production is likely to be a tad lower than last year and extra pressure on mills to export resulting in some spikes in prices. Though estimates are coming in for lesser consumption but in my view this is what will really trigger a bull run in market where we will see a gradual increase in demand be it from industries or household.  

  <= Domestic Sugar Price

Now if we look at performance of Sugar Mills in India we see clear cut hopes of price revival. Major Sugar Mill's share prices are exactly reflecting the way domestic Sugar prices have moved. 

In last 6 months major Sugar companies have outperformed Index Share market by almost 50%

Key here is the way Sugarcane advised prices have moved and in most states prices have not been increased which is a good sign for Sugar Mills

In a nutshell we can now realistically predict that next 2 seasons are going to be good for Sugar Mills which will help them realise better money per kg plus also clean-up their balance sheets a bit.

Déjà vu... (Climate Change.. coincidence or reality in making)

I wrote this blog post on 08th Feb 2012 (3 years back)(http://priyendra.blogspot.in/2012_02_01_archive.html).. Looking at data points available at that moment (data point to a common man through internet) dots were connecting.
Made movie as base for my views so that communication is easier. I personally believe that a Mini Ice Age is something which is far closer to reality then global warming... Nature knows how to balance and it will take care of itself.

After 3 years I see many reports coming in and are relating to movie... what a co-incidence :)
Time to start collecting some fire-woods :)

http://ecowatch.com/2015/10/16/atlantic-ocean-currents-climate-change/
celebcafe.org/could-the-day-after-tomorrow-s-apocalyptic-climate-scenario-really-happen-9675/

February 8, 2012

Climate Change.. coincidence or reality in making

There is a High level climate change conference being held in New Delhi for 3 days.. (http://www.commodityonline.com/news/International-climate-change-conference-in-New-Delhi-45822-3-1.html) all experts from around the globe have gathered to discuss climate change.. 


May be a coincidence that the movie "the day after tomorrow"(http://en.wikipedia.org/wiki/The_Day_After_Tomorrow) also has a scene where a high level meeting is held in Delhi to discuss the climate change and Hero of the movie Jack gives his readings on climate change and scene followed by a snowfall in Delhi... and after that doom starts...


today Mumbai is chilling like never before and reminded me of Delhi weather.. MP and UP its raining.. leh registered lowest temperature in last 100 years.. 


Europe and Russia are under severe cold wave where temperature dipping as low as -30 degrees....(http://www.dailymail.co.uk/news/article-2097779/Europe-weather-Snow-covers-continent-temperatures-plunge-MINUS-40C.html)


well I know its just a hypothetical scenario.. but seems too real... as weather patterns have changed so much that in my last 11 years in Mumbai.. winter is getting chillier year after year...  rains are erratic.. 


better we all wake up.. I see Ice Age and not global warming.... 

Pulses (Dals) Story of India

Pulses prices have been on consistent bull run since last 1 year and despite multiple steps being taken, bull seems far from getting any tired. Most of the pulses rates have doubled in last 12 months and scenario is likely to remain for coming festival period as well.


If we look at fundamentals it all started with anticipated shortfall in production which was getting factored in primarily in Moong and Tur dal. Later it got fuel from poor monsoon and damage in standing crops in some regions. So far the story was pure fundamental based and it triggered price rise to the extend of 30-40% for like to like period of last year. while all these natural factors were in play, unfortunately Govt failed to anticipate and was slow to react to it. Imports were ordered but few thousand tonnes against demand of multi million tonnes would never be enough. It is generally assumed that if Govt takes some strict steps and order extra imports/ tighten hoarders to control, prices generally comes down. But that scenario is likely when price rise is driven more by  pure speculations & less on fundamentals.

This time Teji (Bull run) was primarily driven by Fundamentals like Shortage, poor monsoon, limited import pipelines and ever increasing demand of Indian consumers This was supposed to have just limited to 2 main dals Moong & Tur. Sustained bull run and inaction from responsible authorities gave clue to Bulls and they triggered artificial shortage across Pulses be it Massor, Urad, Chana etc. Today we stand and look at below price points in nearby retail stores.

All in all my personal view is that prices are stretched way too far and a sharp correction of 15-20% is just round the corner. Steps are being taken to increase domestic production like increase in MSP but a lucrative crop incentive, production subsidies, assured procurement and crop insurance will be the key to increase domestic availability.

Above will be short-term measure and to make availability a sustainable feature we need to look at alternates & the next step will be to have a "Post Harvest Management" process in place. (Most likely my next blog topic).

We are consumption driven country and we have to ensure we are putting more efforts to speed up infra & logistics sector development. Our farmers are more than capable of producing to feed every countryman all we need to do is to support them with good returns and ensure minimal losses on account of supply chain and storage.  
      

Grocery Retail - What to expect and who will succeed

In last 1 year we seen some amazing headlines made by retailers of the country.. primarily driven by Online/App based retailers and on few occasions by a few Brick & Mortar retailers through closure or merger of Chains. Nevertheless its exciting time to be in that space.  We saw some great successful ventures in Books, Apparels, Mobiles & home appliances retailing... Even Jewelry & Secondhand retailing is also gaining foothold besides some creative ventures. In this burgeoning Industry where every month is a welcome of new retailer I would like to draw attention towards a segment which has largely remained one of the most challenging sector of growth is Grocery Retailing.    

In Grocery retailing I feel that those with experience on Merchandising, Customer buying behaviors, insight on consumption habits (understanding of taste buds) and most critically robust supply chain network would lead the pack.. Who eats Sona Masoori Rice & who will prefer a Matta or Arwa Katarni Rice. Whether customer would buy large pack of Toor Dal and smaller packs of Moong and Chana Dal or vice versa and interestingly this changes with every 100 miles we drive in any Indian city/ state...

In short an omnipresent retailer will have advantage over single platform Retailer. However the fact remains that Indian consumers have surprised everyone with such fast and smooth transition towards App/web based retailing and amazingly it already accounts for 1% of total Retail Sector in India...

Will keep posting my views.. thanks for reading....   

Indian Retail Market - Opportunities in Food Retailing - Precursor

I feel that Today in India, Retail is divided into 2 large part (i mean broadly) one is on food side (Grocery) and other is on Non-Food lifestyle side (Fashion, Digital etc). What we read today and is getting huge media attention about Price cuts, new jobs, threat to brand owners etc etc  holds largely true for Lifestyle retailing but food retailing is altogether a different ball game, Indians still spend major chunk of money in food and that remains very much in the hands of brokers, middleman, channels etc and real benefit is lost for Producer as well as end consumer. What we need is an integration between Gram-Panchayat (For Supplies) + Brick&Mortar Retailer (To manager back-end storage & distribution) + Online Retailer (To scale up volume and expand geographies). I strongly feel that Indian consumer will surprise everyone with close integration and expansion of e/m-commerce. Just few personal views.. may worth a try to make it a reality.

Will keep downloading my thoughts on this topic for a while now... cheers

India Sugar Season 2014 - 15 Outlook

India's new sugar season has started (or yet to be started??).... On papers Oct-Sep is typical cycle though this time it seems to be getting delayed... Reason.. there are are multiple

1. Huge carryover stocks (close to 11 million MTs) which is highest ever.

2. Good Monsoon.. Good Sowing.. Better cane availability

3. Cane Pricing (The most critical point).. while there is decontrol on sugar sale but sugarcane prices are still driven by states based on there political needs. State Advised Price (SAP) is playing key role in delay in start of production. UP farmers are expecting close to 3000/mts and unfortunately Sugar Millers are realizing close to Rs. 29 per kg.

there may be other minor factors like no consent between UP Millers, drought in TN State etc etc. But fact of the matter is that despite delay in production prices are still under pressure and supplies are abandoned. 

Will keep posting new updates on India Sugar scenario... also starting on Edible Oil and Rice soon... 

Climate Change.. coincidence or reality in making

There is a High level climate change conference being held in New Delhi for 3 days.. (http://www.commodityonline.com/news/International-climate-change-conference-in-New-Delhi-45822-3-1.html) all experts from around the globe have gathered to discuss climate change.. 


May be a coincidence that the movie "the day after tomorrow" (http://en.wikipedia.org/wiki/The_Day_After_Tomorrow) also has a scene where a high level meeting is held in Delhi to discuss the climate change and Hero of the movie Jack gives his readings on climate change and scene followed by a snowfall in Delhi... and after that doom starts...


today Mumbai is chilling like never before and reminded me of Delhi weather.. MP and UP its raining.. leh registered lowest temperature in last 100 years.. 


Europe and Russia are under severe cold wave where temperature dipping as low as -30 degrees....(http://www.dailymail.co.uk/news/article-2097779/Europe-weather-Snow-covers-continent-temperatures-plunge-MINUS-40C.html)


well I know its just a hypothetical scenario.. but seems too real... as weather patterns have changed so much that in my last 11 years in Mumbai.. winter is getting chillier year after year...  rains are erratic.. 


better we all wake up.. I see Ice Age and not global warming.... 

India Sugar Price forecast for 2012

Sugar market seems to have become rather more predictable now... prices were expected to rise in November and they rose.. December will be the month of dullness and so far it has been very boring..everyday prices coming down. 

What I wrote in my last blog about price rise actually got pre-poned and prices jumped up sharply in November month.. now I see prices to re
main slugging in most part of December but I also sense an underline relief rally which should give some support to prices during last week of December and 1st week of Jan '12. Reason is simple .. Festive demands and liquidation of pipeline stock withing December. 

A lot may depend on Sugar release for Jan '12. International market will have very limited impact on Indian sugar prices. 

I think prices will stabilize around 10-12th Dec and may see little trading during mid-month but I see prices moving up by approx Rs. 2/- between 26 Dec-7 Jan '12 (Orange Line). Post that prices will steadily come down down and may be April '12 may see some revival of prices.

These views are entirely personal and based on my own analysis and forecast. 

Sugar prices... UP UP (Uttar Pradesh) and away

In continuation to my last blog what I was anticipating to happen little later may happen a bit sooner... There is a panic in UP and rest of north India.. All of a sudden mills have started to quote rs. 2 higher then y'days close.

Seems more like of a knee jerk speculative move.. but the kind of decision taken independently by center and state Govt this kind of reaction will keep coming. UP Mills are quoting as high as 3150 ex-mill. 

Agri minister was seen quoting " “There is surplus sugar. This is a golden time for India to enter the global market in a big way and get a better price, which will ultimately be provided to cane growers,” Pawar told reporters

Mayawati already announced higher SAP. Center is keeping mum and not looking in a mood to react anytime soon. 

So in a nutshell UP prices will be firm in short term. There are rumors of 35-36 exmill prices also but I personally feel 32-33 is where it'll stop. Reason ... There are other states as well producing Sugar. 

Maharashtra, India's largest producing state is sitting again on a good healthy crop. There a fight going on between mills and farmers but it won't impact prices much so fundamentally there are no major reason for price increase in Maharashtra, so like a couple of years back, Sugar will start to move from MH to UP and I'm sure a couple of deals would have already been broken in last 2 days. Any gap beyond Rs. 2.5 will trigger sugar flow to UP/ NCR. 

Southern states as of now more content with managing local market alongwith export commitment but I sense there is also some excess sugar available, however I'll have to authenticate with some millers down there. 

So overall I feel that this sudden reaction will cool down in a few days but it'll help UP millers to set new base of may be around 31 ex-mill for coming months. 

One lesson or rather pattern I've learnt in my 11 years of career that whenever there is a sudden jump in price of a commodity at the beginning of the season then rest of the year that commodity suffers and remain extremely range bound with bearish tendency.   

Next I'm gonna share State wise production likely in coming season and more on the lesson above I wrote about.. till then Happy Trading