Sugar end stock inches up

FO Licht sees world sugar ending stocks for 2007/08 at86.22 million metric tonnes raw value, up from the November estimate of 84.89million tonnes, according to Dow Jones. FO Licht sees world sugar ending stocks for 2007/08 at86.22 million metric tonnes raw value, up from the November estimate of 84.89million tonnes, according to Dow Jones. Stock levels have grown due to a high stocks to consumption ratio of 55.8%,compared with 43.8% in 2005/06, the firm said. However, world sugar production in 2007/08 is forecast slightly lower at168.87 million tonnes, compared with the November estimate of 169.19 million tonnes, the firm said. Looking ahead to the 2008/09 crop, FO Licht suggests early production estimates may have been too conservative. "If prices stay high ... many exporters may have second thoughts on reducing production while Brazilian millers may be tempted to channel more cane into sugar production at the expense of ethanol, swamping the market with unexpected supplies," it said.

Sugar MARCHing fast...

March '08, dream month for Miller, traders and speculators...

Sugar has been trading firm on the back of brisk domestic buying ahead of the festival season coupled with speculative buying in futures. Traders said higher demand at the beginning of the month coupled with high global prices was offsetting the impact of a higher domestic sale quota for March at 1.6 million tonnes. This year (Oct-Sept) sugar production is likely to total 25.4 million, down from 28 million tonnes the previous year due to delays in crushing operations. Sugar also received a boost from increased demand from soft drinks and ice-cream manufacturers. Many millers are also holding back stocks in expectation of further rise in prices. So far, contracts have been signed for exporting around 3 million tonnes of sugar, with around 1.4 million tonnes already shipped. In Delhi, sugar ready M grade prices increased to Rs 1650-1,690/quintal. Similarly, mill delivery M and S grade prices also quoted higher at Rs 1,430-1,520/ quintal and Rs 1,410-1,500/ quintal, respectively. NCDEX contracts also followed same trend during week but lost out later. Maharashtra, largest producer has moved up most sharply banking on fresh domestic demand and demand from exporters. However its likely that after NCDEX March expiry and so called demand of Holi is over, market may see a sharp correction, primarily in secondary market, where traders and agents have choked up to their head. Overall market may have some more heat left in it but is likely to turn to red in next half of the month.

market sentiments

Today I was talking to few traders/ brokers and got to understand how same thing is judged so differently by different people.... short term bull run of January, which faded in Feb is again knocking doors... Today UP pvt mill jacked up prices by Rs. 300 per mts. Maharashtra mill's first tenders of March were mostly sold out at premium. Sahadri went @ 13400, warna @ 13580 etc etc... NCDEX is moving up very sharply, following NYBOT & LIFFE.....

Traditionally Feb to June period is high consumption period and offtake of Sugar increases considerably, so firs week is expected to fetch good premium as most institutions want to book there monthly requirement. At the same time production forecast also playing some role in framing market sentiments. Till date no one is very sure how much sugar India gonna produce this season, no clue when MH & UP mills will stop crushing, How much cane will be left un-crushed and how much cane have been sown in for next season.... till the time these doubts get some clarity market movement will continue to see same volatility by defying all fundamentals... Happy Trading....attached is Net position on NYBOT.. more people are bullish as of now...

China - Opportunity for Indian Sugar

China is expected to produce 2.65% more sugar in 2007- 08, after a record of 12.6 million tonnes in 2006-07. Total production is forecasted at 12.95 million tonnes. Total consumption is expected to rise by 7.1% to 12.85 million tonnes. High corn prices forced the food and beverage industry back to natural sugar instead of corn sweetener, which had captured market share in previous years. Chinese sugar consumption is growing rapidly this year, particularly from the food and soft-drink industries. Record high production domestically has reduced the imports of the commodity. Imports in 2007-08 are estimated to drop by 10.5% to 8, 50, 000 tonnes. Of the total imports likely to take place in 2007-08, Chinese importers for the first time have braved maximum tariffs to buy cheap Indian Sugar. Chinese buyers have bought around 1 lakh tonnes of Indian at a tariff rate of 50%, assessed on imports that do not fall within the tariff rate quotas (TRQ) system agreed when China joined the WTO. Normally, Chinese mills and traders do not import unless they hold the quotas for the lower tariff rate of 15%. This year, Beijing only granted 30% of its 1.945 million tonnes of TRQs to private companies. Many of the remaining quotas, granted to state-owned firms, have yet to be issued. Two cargoes of Indian white sugar totaling 60000 tonnes have already been imported under the higher tariff being offered at 3,950 Yuan ($525) per tonne in the Northern port city of Tianjin. The price has been cheaper than sugar from the top producing region, Guangxi, offered at 4,040 Yuan per tonne. The recent freezing temperature in the Guangxi region, China's major sugar growing region, may see an overall drop in china’s sugar production by about 5 lakh tonnes this year. This has also led into a price rally on the international bourses off lately sending the contract prices on multiple month high levels.

Brazil Sugar outlook 2007-08

Brazil’s sugar output in 2007-08 is forecasted at 32.85 million tonnes up by 3.96 % from 2006-07. Total sugarcane planted area for 2007-08 is projected at 7.19 million hectares (ha), a 10 % increase compared to 2006-07 6.55 million ha. As a world pioneer in biofuels, Brazil began its sugar cane-based ethanol program 30 years ago after the world oil crisis threw its economy into a nosedive. The number of sugar ethanol and ethanol plants in Brazil was 325 in 2006/07. Around 18 new plants have already started operations in 2006-07; another 16 new plants are expected to begin crushing in the new sugar season 2007-08 and 32 are expected to open in MY 2008/09. Total area planted to sugarcane and ethanol production is expected to increase to over 10 million ha. Sugarcane and ethanol production are expected to reach 727 million metric tonnes and 38 billion litters by 2012/2013. The cost of producing raw sugar in Brazil is around 9.2 cents per lb and 12.39 cents per lb for white. The cost of producing ethanol in Brazil from sugarcane currently accounts at US$0.29 per litre (rate of exchange US $1.00 = R$2.00). Being an important user of ethanol for its fuel consumption, Brazil’s total domestic ethanol consumption for 2007-08 is expected to be 17 billion liters of ethanol, up 2.85 million liters compared to previous year’s 14.2 billion liters.

World Sugar 2007-08

World sugar availability for 2007-08 is forecasted at 209.97 million tons, of which carryover stocks from previous season 06-07 stood at 44.53 million tonnes and the new sugar season production is expected to be 165.44 million tonnes which is up by 4.1 million tons from previous year. Consumption is estimated at 154.8 million tons, up 5.9 million tons. Exports are forecasted at 51.19 million tons, up 2.4 million tons; and ending stocks are forecasted at 55.09 million tons, up 10.56 million tons v/s 2006-07. Higher production in Brazil, India, China and Thailand has once again led to a record sugar production in 2007-08 sugar seasons.