Sugar tumbles on ample stock

Sugar futures continued to trade lower on Wednesday due to sufficient availability or stocks following allocation of higher free-sale quota for current month.
The Ministry of Food & Public Distribution has decided to make available 19.07 lakh tons of sugar for April 2o11, which it feels would be sufficient to meet the internal demand for the commodity during the month. An official press release said this would include 2.07 lakh tonnes of levy sugar and non-levy sugar of 17 lakh tonnes.
The non-levy sugar would induce normal quota or 15.8o lakh tonnes, 0.2o lakh tonnes or white/refined sugar processed out or imported raw sugar during February 2o11 and 1 lakh tonne or carryover quantity of unsold /undispatched non-levy sugar during March 2011. With the country's sugar production set to exceed domestic demand, the government is likely to remove 60 per cent import duty from today.
India, the worlds top sugar consumer and the biggest producer behind Brazil, allowed unrestricted exports of 5o0,00o tonnes. However, absence of a formal notification from the government is keeping the millers and exporters worried. Union ministry of rood and public distribution has directed the Maharastra government to set up export cell to monitor Exports.
London May white sugar and ICE Raw Sugar futures slipped further on expectations the supplies globally would start increasing once the Brazils
Sugar harvest starts in full swing. Brazil wants to increase regulation or the domestic ethanol market to ensure output, signaling a move that could have major implications ror global sugar supplies.
Domestic Pricing Production &Consumption
India has raised the price sugar mils must pay to purchase cane from farmers to 145 rupees ($3.2o) per 1oo kilograms in the next season that begins from Oct. I, government sources said during the 1.ast week. In the current season to September, the cane purchase price had been fixed at 139.12 rupees per 1oo kgs.
Sugar production in UP is expected far below the 7 million tones estimated at the beginning of the season. As on 22’ March, 2011. 5.s1 million tonne sugar had been produced UP.
The ISO, in a quarterly update, projected .1 global surplus in October 2o1o to September 2o11 of just 196,000 tonnes, well down from the 1.29 million seen in the last update in November 2o10.Global consumption in 2o10-1n1 was revised up by 180,000 tonnes to 167.849 million tonnes.
Outlook
Sugar prices may trade sideways to down in the coming days as sufficient stocks at the domestic mandi may pressurize prices. No official notification with respect to exports is also underpinning the sentiments.
However, Sugar prices may start recovering once the government approves the applications for exports of Sugar. Also, increase in stock limits and reintroduction of 60% import duty on Sugar may provide further support to the prices. Prices may gain by Rs. 100-15o per qtl in the coming weeks.
In the medium term prices would depend on the permissible Sugar exports by India and the final estimates of Sugar output. Prices are expected to trade in the range of Rs. 26o0— Rs. 2900 per qtl levels.

(Source: http://www.commodityonline.com/futures-trading/technical/Sugar-tumbles-on-ample-stock-23069.html)