NCDEX Sugar recovers on supply crunch

NCDEX March Sugar futures ended marginally lower by 0.11, whereas, spot prices closed marginally higher by 0.58% on Monday. No clarification with respect to exports of Sugar under Open General License has kept market almost stable on the first day of the week.
Supply situation is also worrying millers as might not sell allocated nonlevy sugar quota for February.
The Indian government is considering the demand to completely lift the ban on export of onion and sugar. (Source: Business Line). New York commodity markets (ICE Raw Sugar futures) were closed for the U.S. Presidents Day on Monday. After testing a six weeks low, Sugar futures at Liffe improved slightly and settled up by 0.54% on Monday. The global sugar market is expected to move into a 5.6 million tonne surplus in 2011-12 (April-March) after a deficit of 0.1 million tonnes a year earlier, the Kingsman consultancy said on Sunday in the 7th Dubai Sugar conference 2011 which would end today.
Domestic Production
According to the second advance estimates on crop released during the last week by agriculture ministry, India’s 2010-11 Sugarcane output is seen at 336.7 million tonnes vs Sept estimate of 324.9 million tonnes. The Indian Sugar Mills Association (Isma) had revised the country’s sugar production downward to 25 million tonnes (mt) for the 2010-11 season against 25.5 million tonnes estimated earlier due to lower recovery rates in Uttar Pradesh.
According to ISMA, Sugar output in Uttar Pradesh is lowered to 6.4 mt from 7 mt due to late rains, while in Maharashtra, the country’s biggest sugar producer; it is kept unchanged at 9.4 million tonnes. Domestic consumption for 2010-11 is projected at around 22 million tonnes.
The global sugar market is expected to move into a 5.6 million tonne surplus in 2011-12 (April-March) after a deficit of 0.1 million tonnes a year earlier, the Kingsman consultancy said on Sunday in the 7th Dubai Sugar conference 2011 which would end today.
Global sugar stocks-to-use is estimated at around 10 percent, a director of London-based trade house Czarnikow, told the Kingsman sugar conference in an address on Sunday.
Brazil's center-south (90% of total production in Brazil) 2011/12 cane crush is estimated at a record 566 million tonnes, up from 560 million tonnes forecast in December. Brazilian sugar exports are expected to rise to 23.8 million tonnes in 2011/12, up 700,000 tonnes from a year earlier Thus, despite of decline in Australia’s Sugar exports due to floods and cyclone, global supplies would not fall much as Brazil would make up for any shortfall in Sugar globally. This would keep Global Sugar prices stable in the short term.
Outlook
Sugar prices in coming days are expected to recover on expectations that the government may very soon take a positive decision on Sugar exports. However, if government does not allow exports Sugar prices are bound to come down as India is having surplus stocks.
Overall sentiments in the medium term would depend on the permissible Sugar exports by India. Prices are expected to trade in the range of Rs. 2950 – Rs. 2900 per qtl levels.

(Source: http://www.commodityonline.com/futures-trading/technical/NCDEX-Sugar-recovers-on-supply-crunch-22076.html)