SUGAR

FUNDAMENTALS

Spot sugar traded flat on lack of demand. Increased selling pressure by mills trying to liquidate their quota, coupled with crushing of new crop will pressure the prices. The fundamentals are not supporting the prices in the long term. Meanwhile, granting partial relief to sugar mills, the Allahabad HC has directed the mills in UP to pay Rs. 110/qtl of cane to the farmers, instead of Rs. 125-130/qtl SAP. However, contrary to the proposition of CCEA to grant bank loans to mills equivalent to the excise duty, interest on which would be borne by the Centre and Finance Ministry would only provide up to 5% subvention. This translates into an effective interest of 7-8%, assuming prime lending rate of 12-13%.

TECHNICALS

Prices remain above the short term EMAs, suggesting firm prices. MACD is rising in the positive territory, indicating increase in bullish momentum. RSI is reaching the overbought territory. Sugar futures are likely to trade side-ways with firm tone in the next session. However, 1245 level is seen providing a stiff resistance to the uptrend which traders can consider as good selling opportunity.

WEATHER

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

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