Fundamentals of Sugar to remain in bullish trend

Fundamental Analysis
Restricted supplies in the Spot markets led to surge in the Sugar prices across major markets on Friday. Sugar Futures recovered in the last 2-3 days due strengthening Newyork raws and London white Sugar futures.

Raw as well as white Sugar futures in the global markets rose in the last 2-3 days due to tightening world wide supplies of Sugar amid lower production in India and expected lower yield from Sugarcane in Brazil.

In the international markets, ethanol demand form Brazil is showing a moderate increase. How far will it continue will decide the Sugar ethanol ratio in Brazil.

In the international markets, ethanol demand form Brazil is showing a moderate increase. How far will it continue will decide the Sugar ethanol ratio in Brazil.

From the medium term (May) perspective, fundamentals for Sugar remain strong due to lower production estimates in the India as well as rising deficit in Global markets. Global Sugar demand is expected to outstrip supply and build a larger deficit in 2009-10.

Technical Analysis
Sugar prices (NCDEX June 09 Contract) closed at Rs. 2333/qtl, higher than Tuesday’s close of Rs.2328 qtl.

Prices closed above its 5 days and 65 days SMA but below its 20 days SMA indicating a sideways trend. RSI is at 50 is moving in sideways to down manner.

Outlook
Talks of lower yield from Brazil’s central South crop have led Newyork and Liffe Sugar to recover in the past 2-3 days. In the Indian market, increased supplies are likely to be overshadowed by the increasing summer season demand. Any significant decline in the prices should be treated as a good buying opportunity as overall, fundamentals remain supportive for the prices with lower output forecast in India and a global deficit of more than 4.3 million tonnes.

According to research by Angel Commodities, Indian Sugar prices are likely to trade in the range of Rs. 2300-2600 per qtl in the medium Term (June). In the international markets, the current sentiments appears to be divided into two camps- the bulls who believe that the ongoing Indian Sugar deficit will eventually rally the market to new highs, and the bears who believe that the increased (new crop) Brazilian production will weigh heavily. We expect ICE Raw Sugar futures to trade between 13-15 cents per pound in the short term.

source: commodityonline