SUGAR

FUNDAMENTALS

A bearish tone for sugar prices continued in the domestic market amidst lower demand and higher supplies. The government has urged the sugar mills to complete the sale of 27.5 lakh tonnes of dismantled buffer stocks of sugar by 30th September, 2008. The government has also alerted that unsold quantity would be converted into levy. It has raised expectations that the supplies would be increased in near future and finally the prices will decline in the spot market. Meanwhile, forecast of sharply lower production in next crop year in a key growing region will provide underlying support to the market, traders said. The production may reduce to 20-22 MMt in 2008-2009. Besides, strong festive demand will also provide underlying support to the market. Sugar exports are expected to sharply decline to around 1 MMt in the next crop year amidst higher local prices than international market.

TECHNICALS

Candlestick chart hints lower opening and subdued market for the next trading day. Close far below the 9-day as well as 18-day EMA, hints medium -term bearish market. MACD is moving down in the negative territory and supports for the bears. 14-day RSI is moving down in the oversold region, supporting near –term weakness. Higher volume but lower open interest did not support present market trend. Sugar futures are expected to trade weak after a lower opening.

WEATHER

Generally favorable moisture conditions for the crop in the major growing areas of north-central India.

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