SUGAR

FUNDAMENTALS

Sugar spot prices dipped further on lack of offtake amidst normal supplies from mills. Market is likely to be weighed down by fresh supplies as crushing progresses, causing further fall in sugar prices. Meanwhile, India is expected to make less of the sweetener than forecast by traders and millers because of delays in crushing cane, easing a glut that has subdued global prices.  Output is expected to be around 28.3 MMT in the current season, from 28 MMT last year. A delay in crushing in Maharashtra and Uttar Pradesh has caused production to drop 30% in the two months ended November. However, a recovery is not anticipated in another 18 months as Indian producers are still grappling with huge stocks and rising cost of production.

TECHNICALS

Candlestick pattern as well as flat RSI in the neutral region suggests indecision in the market. Prices closed below the short term EMA supporting weakness. Stochastic is falling steadily in the neutral region hinting further downtrend in place. However, MACD is flat in the positive territory after making a bullish crossover, indicating the inherent bullish nature of the market. Sugar futures are likely to trade range-bound to weak in the next session. 1272-1274 levels are seen providing good support to the prices. Hence, trade with caution.

WEATHER

Late season rains in the north and south India aid developing sugarcane crop.

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