SUGAR

FUNDAMENTALS

Sugar market continued to be steady and looking for direction.  Demand from bulk consumers is expected to pick up, with temperatures shooting up. Meanwhile, some clarification is awaited from government over interest subvention to the industry, which is conceded by Finance Minister recently.   Traders believe that millers are likely to be allowed to sell sugar freely without any quantitative restrictions but that has not happened so far. India's Supreme Court has directed millers in the northern state of U.P. to clear their cane dues for the 2006/07 season at the rate of Rs 123/quintal. Export demand for Indian sugar is expected to revive. Indian companies have so far contracted to export around 3 MMt of sugar, out of which around 1.4 MMt have already been shipped. Sugar industry is slightly disappointed with Finance Minister not conceding further sops to the ailing sector.  It is for the industry now to find, how between sugar and ethanol they will adjust the manufacturing program to keep the prices profitable.   

TECHNICALS

Candlestick chart indicates firm buying interest with mild profit booking around higher levels. Close above the EMAs and MACD increasing in the positive territory is supportive for further firmness. However RSI is in the overbought territory denoting correction is due any moment. Any weakness noticed will be good buying opportunity. Stochastic is about to enter the overbought region leaving scope for upside movement. Prices are likely to open weak and thereafter continue the firm tone during the session.

WEATHER

Rains late in the Monsoon season mostly favored sugarcane development in south India.

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