India.. net sugar importer

India... likely to remain importer for atleast 2 more seasons... unless farmers go beserk and again produces all time high cane...

World Sugar Demand & Supply

Latest estimates by some of Sugar Industries leading trade house and analysts...

source: www.sugaronline.com

Sugar 2009... the year so far

Sugar prices in India, the largest sugar producer after Brazil, have risen dramatically this season, starting October, due to then projected 32 % decline in the output to 18 million tones, which now is projected to be around 16 mmt. Feb saw sharp jump in prices as Food minister ruled our stock limit imposition. However eyeing election govt came up with series of announcement to control spiraling sugar prices starting with allowing duty free imports and followed by imposing stock limits. Price have fallen by almost 10% since the highs made in Feb and are likely to remain stable in coming days as no fresh bulk buying or demand season is coming up and govt will keep the pressure on traders and hoarders to control price rise. However outlook for April month onwards definitely looks promising which I'll write in my next blog... keep reading

Stock Limit announced

India Thursday issued a notice that sets sugar stock and turnover limits, with ceilings to be announced later by state governments, according to Dow Jones. The move limits the amount of sugar that can be stored by companies. The notification will be effective from March 27 for the following four months, the statement said. In Kolkata, the capital of the eastern state of West Bengal, recognized traders can hold stock of 10,000 bags of 100 kg each, while others are allowed to hold a stock of 2,000 bags. "It will bring down the prices by INR40-INR50 per 100 kg (US$0.77-US$0.96) as traders would offload their surplus stocks," said Mukesh Kuvadia, secretary of Bombay Sugar Merchants Association.

India Sugar... We never change

In my last review I was quite optimistic about the change and progress Indian sugar industry was experiencing, but sadly it was very short lived and today when I look at the numbers it reminds me of same story of last booms and busts every 3-5 years..... The way India's production numbers are falling outsiders are making joke of it and saying that "we never change". Ironically during 2008/09, India was indeed an exporter of sugar, about 5 million tonnes of sugar were exported, including 2.9 million tonnes of raw sugar. Now this year we are Net Importer and have already contracted 1.5mmt primarily from Brazil. I estimate that we should close this season with about 17.5mmt with consumption of about 23mmt.

As we talk to states MH is down about 45% to 5.1mmt, UP at about 4.8mmt and rest others also declining in more or less same %age.

Sugarcane farmers have been paid really well this season which will prompt them to grow more cane in future and hence 2009/10 looks to be a better years in terms of availability.

Imports have already started (Early contracts were made @ $310-340 per mt) which today looks a real good buy. World market reacted to Indian demand and gone up sharply to touch $400 per mt recently.

I personally feel very sad about the way we operate such critical industry to take some political mileage and capture vote banks. Rather there is a strong need to empower farmers to grow more crops not only sugarcane but more of wheat, soybean, cotton etc to ensure that our 70% population, which lives in village and is depending on agriculture, propels the economic growth to take us through this recession...

India Statewise Sugar Scenario 2008-09

State-wise Scenario:

We will keep our focus on 2 most important states UP and Maharashtra. Uttar Pradesh sugar mills are as usual knocking the doors of the court for granting some relief in SAP (State Advised Prices) after the announcement of Rs. 140/qntl SAP for cane. However few mills have started crushing and rest will follow soon. This season Sugar production is likely to fall by about 30% to 6.1mmt from 8.2mmt last season primarily due to lower crop of sugarcane and delayed crushing. Maharashtra is likely to face shortage of cane this season as crop area has dropped by about 35% hence will immediately impact sugar production. This season MH is likely to produce about 6.3mmt i.e. 36% fall over last season. Rest of the country will also face the cane shortage this season and hence will directly result in lower sugar production and normal crushing season, likely to end by April end.

Silver... Invest for next 5 year

Silver's price history Silver remains historically undervalued. Despite the incredibly bullish fundamentals outlined silver has so far underperformed nearly all the other commodities. Silver has gone from below $5 to some $16 and is up some 190% in the last 7 years.
This seems like a lot but when compared to other commodities and metals it is very little:
Oil is up from $10 to $63 or 600% and more than 6 fold.
Zinc from $.35 to a high of $2.00,. now $1.50/lb or nearly 5 fold.
Copper, from $.75 to a high of $4.00, now $3.58/lb or nearly 5 fold.
Lead from $.20 to $.90/lb or nearly 5 fold.
Nickel from $3 to $22/lb or more than 7 fold.
Indium, Molybdenum, Selenium, Cobalt are all up 1000% or 10 fold and more.
Uranium is up a phenomenal 1300% or 13 fold.
Many commodities are up between 5 and 13 fold. Silver is not even up 3 fold. If silver were to catch up with these other less rare and less precious metals, it would have to increase in value by some 500%. From the bottom at some $5/oz in 2001, that would result in silver being valued $25.
Silver reached $50 briefly in 1980 when just one billionaire Bunker Hunt (one of a handful of billionaires in the 1970’s) attempted to corner the silver market causing the price to surge (in conjunction with many investors seeking to hedge themselves from the stagflationary 1970’s). A lot of technical orientated analysts, investors and hedge funds are looking at this figure and as nearly all the other asset classes and commodities are all at near all time records there is every reason that silver will do likewise in the coming years.
Silver is priced at some $16/oz today. The average price of silver in 1979 and 1980 was $21.80/oz and $16.39/oz respectively. In today’s dollars and adjusted for inflation that would equate to an inflation adjusted average price of some $60 and $44. It is for this reason that we believe silver will be valued at over $50 in the next 3 to 5 years.

Water... commodity of future

My personal belief that one day Water will be traded like the way Oil is traded today. Excerpts from article recently ported on web:

At first glance a map of the world doesn’t exactly scream “water shortage!” After all most of the world’s surface is covered in it. The problem is that only 2.5% of all the world’s water is fit for human consumption – and around two-thirds of that is locked away in icecaps and glaciers. This percentage has been fixed for as long as scientists have been researching the matter and is not about to change. Water is not like other commodities – there won’t be a ‘eureka’ moment where new reserves are suddenly discovered. And unlike other commodities, there is no substitute for water and just about everything and everyone relies on it. By the time you’ve got up, showered and had breakfast, for example, you will have consumed 40% of the 135 ltrs without giving it a second thought.

Investing in Water:

Although there is no known substitute for water, some of the wealthier Middle Eastern countries with the harshest desert climates have grappled with what seems an obvious solution – turn the sea into something that you can drink, or at the very least wash in. Desalination is expensive, but is popular in places such as Israel (15% of the country’s water is derived this way), Dubai, Malta and the Canaries. The filtration process is not without problems. There’s the huge amounts of power required to drive the pumps, not to mention the waste produced as a by-product; according to Heather Cooley from the Pacific Institute, typically it takes 100 million gallons of seawater to produce 50 million gallons of desalinated water. The other 50 million gallons of heavily salted brine is dumped back into the ocean. This, along with the high cost of establishing each plant, has been one of the main barriers to the process being adopted outside of the Middle East.

India... failing to export sugar....

India may sell less of sugar abroad than previously estimated because of higher domestic prices, supporting a globally rally in the commodity, according to Bloomberg. Exports may total 3 million metric tonnes in the season ending Sept. 30, SL Jain, director general of the Indian Sugar Mills Association said in an interview in Mumbai. That's less than 3.5 million tonnes the group orecast in February. Prices in Maharashtra, the nation's biggest sugar-producing state, have climbed almost 40% to Rs1,250 (US$31) per 100 kilograms on average since the season started. Prices in Uttar Pradesh have risen 25% in the period, Jain said. It is more profitable now to sell sugar locally,” he said. “A lot of factories have defaulted” on their export contracts because of rising domestic prices. Mills have sold 2.1 million tonnes of sugar since Oct. 1, including 1.3 million tonnes of raw sugar, he said. The country shipped only 1.7 million tonnes last year because of a ban on exports that was lifted in January 2007.

LMC Sees India importing sugar

India, a key supplier of raws, may have to import sugar by 2010/11, a leading global consultancy, while a domestic brokerage said imports would happen sooner as domestic output drops. Refineries around the world, especially in the Middle East started viewing India as a dependable supplier of raws as the country, saddle with huge domestic stocks, entered the raw sugar export market in June 2007, when it sold 500,000 tons. According to trade sources, after a record output of 28.4 million tons in the crop year to September 2007, output in India is likely to fall in the next two to three years as farmers shift from sugarcane to more profitable grains. Mr. Gareth Forber, Head of sugar research at LMC International Ltd has stated that India may have to import sugar in 2010/11 after exporting less in the next two seasons. He said India’s exports were expected to fall to about 2.5 million tons next crop year, one million tons lower than the estimated 3.5 million tons this year. He added that India can manage to export some sugar in 2009/10 but may have to import in 2010/11.