SUGAR

FUNDAMENTALS

Sugar traded steady at the spot markets on inactivity. The supply was limited as the mills have sold off their November quota amidst fall in demand from bulk consumers and stockists. Prices might weaken further once crushing gains momentum, loading the markets with fresh supplies. The sugar prices outlook remains bearish in the long term on account of the huge accumulated supplies. Raw sugar prices have fallen by more than 15% so far this year due to huge oversupply from Brazil and India. Recovery is expected by 2009 as farmers would plant less sugar cane due to weak prices and stocks would start declining. Meanwhile, global sugar prices fell sharply in last few weeks on speculation that India will double exports and swell global surplus. Brazil’s sugar cane production is estimated at 475 MMT.

TECHNICALS

A long dark candle is formed in the charts. Close above the 9 as well as 18 day EMAs suggest firm prices. However he much expected correction seems to have begun for the recent increase in prices from 1246 till 1368 levels. RSI is dipping in the neutral region, while Stochastic is falling in the overbought region after a bearish crossover, supporting the downtrend. MACD is rising in the positive territory, indicating inherent bullish posture of the market. Sugar futures are likely to trade sideways with weak tone in the next session.

WEATHER

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

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