Sugar Futures Prices extend Uptrend on Expectation

Sugar futures prices remain bullish on expectations of lower monthly quota for March coupled improvement in spot demand. Although government has not yet released March quota, the talk has boosted spot demand.

In NCDEX sugar April contract on Tuesday closed at Rs.2957 per quintal, higher by 0.27 per cent against the previous close. According to an analyst with Angel Commodities, sugar prices may remain firm during the intraday on various positive factors which includes export notification, expectations of lower monthly quota and improvement in physical demand.

On 23rd February 2012, Indian government issued a notification to mills detailing terms for the export, wherein it asked mills exporting sugar from their own production to submit applications to authorities within 30 days from Feb. 23 while those sourcing the sugar from another factory were asked to submit applications no later that 45 days from the date of the circular.

The global sugar markets may initially correct lower following the expiry, but the traders there see the potential for the May premium over July to strengthen as a limited amount of Sugar remained available for delivery against May, particularly with the timing of Muslim holy festival which will boost demand, according to Angel Commodities.

Sugar output during Oct 01 till 15th Feb 2012 is up 15% at 16.3 mn tn on higher cane area and recovery. According to ISMA, Maharashtra, the country's largest sugar producer, is likely to produce 9 mn tn sugar in 2011-12 season, followed by UP at 6.8 mn tn and Karnataka at 3.8 mn tn.