There are many moving variables here. Let me try to list some of them here. This may not be exhaustive, kindly add to this list:
- Sugarcane acreage & production- this is further affected by FRP/SAP, Cane arrears, prices of alternative crops, monsoon
- Ehtanol mixing- Dependent on govt policy largely. Indirectly also affected by crude oil prices (lower crude oil prices reduces willingness of the OMCs to increase ethanol mixture)
- Global prices- If the prices globally firm up, it can be an outlet for the excess sugar stocks of Indan mills. Global markets have excess supply of 5.5-6 MN tonnes as of last season. India accounts for almost half of this. The global market is largely dependent on Brazil as it is the largest producer in the world. To that extent production in Brazil is a key variable. Production in Brazil begins in April/May. As per this article of 2014 the farmers and mills in Brazil are under stress and they expect the production and crushing to be lower this year. Also the brazilian Real is a key variable. The same has depreciated over the last year or so, further depressing the sugar prices.
- Govt measures of interest free loans/buying buffer quantity, import duty etc- some of these are more temporary measures which will not have an impact on sugar prices which is the key variable to look at/predict in my view.
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