Production figures have been moving really haywire making it tough for miller and traders to take a longer view on sugar price movement. Last month Food Minister estimated production of 26mmt against 28.3 of last season. Point to be noted is that 3 weeks after his announcement ISMA came up with figures of 27.5mmt. It looks same as last season when Food Minister started with 23mmt and ended up with 28.3mmt.
Key factors which will determine the future course of final 07-08 figures are:
1. Till when mills crush cane in UP & MH. If its March for UP and April for MH then final output may not exceed 26mmt, but if crushing is extended by one month of so (more likely situation) then 07-08 may catch up with last season.
2. Recoveries - first the extended winter season in India then high difference between day & night temperature (In UP), which helps cane to produce more sucrose may add up to higher recoveries. (already seen in MH)
World market is experiencing some bullish trend for last 2 months and likely to continue due to off-season in Brazil, high crude prices, China and Australia's crop damage and India's uncertainty to export.
I'll write about that in detail in my next post .. till then have a happy trading time....
