Sugar Mar. futures closed negative yesterday largely due to huge stocks with the traders following persistent supply from the sugar mills against the regular demand. The expectation of announcement of export subsidy this week capped the further loss in prices.
As per the revised forecast, Sugar mills are expected to produce around 26 million tonnes in 2014-15 season ending September. Maharashtra production is projected to rise to 9.5 million tonnes from 7.7 million tonnes in the previous year. ISMA projected the annual domestic demand of sugar at 24.8 million tonnes.
Food ministry had provided a subsidy of Rs 3,371 per tonne for exports of raw sugar until September 1.4 million tonnes of sugar. The Cabinet Committee on Economic Affairs (CCEA) approved a proposal to allow states to fix the retail price of sugar sold through the Public Distribution System (PDS).
Sugar production has reached 10.3 million tonnes till Jan 15 for the 2014-15 season, as against 8.65 million tonnes in the year-ago, a rise of 19%. Till Jan 15, 494 sugar mills were operating in the country as against 486 sugar mills in a year ago.
Oil-producing nations from Iran to Nigeria and Russia are cutting sugar imports as lower crude prices curb their ability to obtain dollars to make payment according to McGraw-Hill Financial Inc.
Rabobank has forecasted a decline of 1.8 million tonnes of global sugar supplies for 2014/15. In Australia, drier weather is likely to result in lower sugar production in the year ahead due to the prospect of an El Nino weather event. China's sugar production predicted to decline 12% against the backdrop of a 4% rise in demand.
According to ABARE, Dec quarterly forecast, Australian raw sugar exports would rise 6 % in 2014–15 to 3.3 mt, up 7%, with higher volumes more than offsetting the impact of lower prices.
According to International Sugar Organization, the world stock has reached 76.6 mn tonnes as of the end of 2015-16, equivalent to 42.8% of world annual consumption.
Sugar futures may trade on a mixed note on export subsidy announced by the government but the ample supplies may pressurize the prices.
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