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 

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. 

Time is coming to buy Sugar company shares...

Good time to start accumulating Sugar company stocks ....


Bajaj Hind and Renuka can be a good buy.... Coming season (2011-120 again going to be depressing year with likely production of approx 26mmt but it'll set up a real good season a year later... lets see how market plays out.. these are my own views.. :) 


Growth of as much as 10% in sugar output this season from India -- the world's second-largest producer after Brazil -- could be significantly lower in the following harvest. India's production generally sees a three-year cycle, with two consecutive years of high production and one year of lower output. Head of the Indian Sugar Mills Association says those two years were the previous harvest and 2011-12 year. The 2012-13 harvest "is the question mark," Abinash Verma says. Raw-sugar futures are rebounding from a recent slump, mainly on doubts over Brazil's harvest size this year. July delivery recently 3.3% higher on ICE at 22.65c/lb. 

Global Crisis - More political and policy related and less of economic

There are a lot of media coverage and a panic reaction in financial market since last few days (Esp after Drama is US) Though I'm naive to put in comments on something so big but thought of sharing my personal views on recent developments....

Firstly I feel this time situation is far more complicated than 2008 economic crisis period as during 2008 time the focus was only on financial irregularities and their correction hence all efforts were put in to bring money flow back to market and ensure bad debts / dead money is cleaned off. For that Govts across globe took the hit and cleaned up most of the mess. But now Situation is much more complicated, its not just US Dollar and their debt limit which is cause of concern (if that would have been the case US would have printed more currency ($) to bring situation under control). This time the whole intent of doing the right things were put on stake hence it all spiraled.

Secondly this time esp in EU there is a much bigger problem has cropped up (which most of emerging market anyway facing) and that is of Socio-Economic Disparity. There is fast growth of people in western countries that are getting poorer due to economic slowdown and now with recent cut in social spending, this will increase more. This has led to fear among people and they have started to panic (which is visible in recent outburst of Riots in UK)

Third I feel if US and EU are able to overcome this crisis (which most likely they will esp US) there corporate (large companies) will become financially much more stronger and confident about future. This will lead them to expand in to new emerging markets much more aggressively and will look at hostile takeovers in Africa/ SE Asia/ India/ Japan. China being relatively closed economy will not face any trouble at home but will surely face tough competition overseas. It'll be a classic case of Hunter becoming Hunted.

These are some of the thoughts which are coming across my mind and will keep posting as and when I'm able to put words into it.

India's Soil Story

This is an excellent article published by Economic Times and its so true in times to come that we'll have deteriorated land and our food consumption will be rising year on year.

All we need is a Govt led research set-up which will educate Farmers on various pluses n minuses of using particular fertiliser in the field...

What India need is a sustainable growth in food production without compromising on land quality, whcih is very much possible if all stake-holders come together and work in same direction...

Its a long but very good article.. have a look

http://articles.economictimes.indiatimes.com/2011-07-12/news/29765398_1_soils-farmers-cereal-production

Silver...heading for 1,00,000 per KG

Silver today crossed Rs. 66000 per kg... and its just following one path... for a couple of years now. Still when one compare WHITE metal with Gold.. its still cheap. Silver once crossed $50 (about rs. 75000) mark in 1980 but that was short-lived and since then Silver was sleeping.

I feel that Silver is all set so cross that historical level and will touch Rs. 1,00,000 mark. When is one big question but looking at the increased focus and interest in Silver by all possible investors this seems to be a reality sooner than later. Keep fingers crossed....

nice article to read...

http://www.commodityonline.com/news/Watch-out-for-Gold-Vs-Silver-in-2011-38233-3-1.html

Silver has miles to go...

Silver outperformed Gold for nearly few decades in 19th century and now it seems the ame time is coming back... Silver has started to move faster and is likely to pick up some more steam and outperform gold in long-term.. this report I was going thru gives more or less same indication... go thru it ... http://www.kitco.com/ind/TimWood/apr012011.html

Miracle do happen... Brazil imports US Ethanol

High international price of Sugar worked as great incentive for Brazilian mills to turn to Sugar production rather ethanol.... Sugar production up 15% YoY and ethanol just 7% YoY....

The scarcity of sugar products in Brazil, the top producer, has led the country to turn to the US for corn-based ethanol to replenish depleted supplies of its own cane-based alternative, Agrimoney.com has learned. Brazil's North East region has, in an unusual if not unprecedented move, begun importing US ethanol to replenish supplies lost as soaring sugar prices encouraged mills to turn cane into sweeteners rather than biofuels. The move defies typical industry dynamics which, as sugar ethanol is less energy-intensive to manufacture than America's corn-based biofuel, typically makes Brazil's version significantly more competitive.

http://www.agrimoney.com/news/exclusive---sugar-squeezed-brazil-buys-us-ethanol--2888.html