Sugar seems Up in Indian Market in Medium Term

For the last three weeks, a sideways movement is seen in the Indian sugar futures market. In fact some recovery is seen from the lower levels. 

Monsoon still remains weak in the major sugar growing belt like Maharashtra and UP. Please note that sugarcane is water intensive crop and if major short fall is seen in the monsoon rains in these states, then the production may decline significantly. 

Some preliminary assessment about the Indian sugar Production is made by the Indian Sugar Mills Association (ISMA). Some important points are quoted here.

• As per the latest Release from the Indian Sugar Mills Association, the total estimated sugarcane acreage of the country in 2014-15 sugar season would be around 52.30 lakh ha, which is about 2% less than last year.

• The preliminary estimates of Indian Sugar Mills Association (ISMA) for sugar production in 2014-15 sugar season, works out to around 253 lakh tons of sugar.  This would be about 4% higher than the estimated sugar production of around 243 lakh tons in June 2013-14 sugar season.

• With an estimated opening balance of sugar of around 75 lakh tons, as on 1^stOctober, 2014 for the next sugar season and sugar production as estimated above, there will more than sufficient sugar to take care of domestic requirement, of around 245 lakh tons next year.

It is seen that there has been substantial change in the final sugar production estimates almost every year from their preliminary estimates. 

In the light of the current weather conditions it is more likely that the production may be revised downward substantially from it's current estimates in India.

This will give definitely give bullish impetus to the Indian sugar market.

We expect prices of sugar to increase up to Rs. 3500 per quintal in the next 2-3 months. Downward movement seems limited to Rs. 2950 to 3000.