Cost of Cane will have direct impact on Sugar prices

Just thot to share crisp overview :

1. India's sugar production likely to be less than last year. (likely to be 24.7mmt)

2. Driven by political move.. cane prices already increased in UP.. rest all will follow suit..

3. India will export atleast a million ton of Sugar if not more...

4. Brazilian output is anyway likely to be lesser than earlier forecast

So at a macro level everything is rightly placed for higher Sugar prices.. but all we need to wait n watch is will it happen now or later... 

I feel that first round of price increase is already underway and prices in India have already gone up by Rs. 2.5 per kg in last 1 month. This is likely to inch up further by 50 paise or so. Second round will start after mid December which may continue till Jan 14th. I see prices to be in range of 32-33 ex-mill in that period. 

Well these numbers are based on my personal understanding which is based on current market scenario and any Govt intervention may have impact on prices. 

Equation for now is 

Cost of Sugar cane : 2400

Operation cost       : 300

Excise                    : 100

TOTAL                : 2800/-

So worst case scenario cost of producing Sugar is anyway going to be min 28/- per kg and if Farmer agitate (which surely going to happen) this cost will be no less than 30-31 ... 

So in a nutshell be prepared to shell out around 35-36 per kg at retail level. Also Institutional buyers like Nestle, Britannia, Coca cola, Pepsi, Cadbury etc.. I feel that they must start booking some quantities in advance (Forward contracts) to gain the price advantage.