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Neil991
Contributor

Sugar Futures set for big upmove --> $0.28 - $0.30 (people do not know problems brewing in India)

Hello everyone,

 

I am a trader from Mumbai, India.

 

I have been tracking Sugar over the last 3 months and I see everyone talking of excess Sugar coming in from India (exports) and how the next year's crop will be great and that the market will be flush with sugar etc. Hence, the price has seen a gradual decline from $0.26 cents (2 months ago) to approx $0.21 cents yesterday.Thats a great fall of 19% from the high. I have started buying Sugar from $0.22 cents and plan to buy some more around $0.19 cents if I am lucky in the coming days...

 

Here is the thing:-

1- The Indian production scene is in doldrums.

2- Indian mills OWE the cane planters (poor farmers who do not have any access to commodity markets) in excess of $2 billion. Thats a HUGE sum for these poor farmers.

3- These farmers are up to their noses in bank debts since they have not received any payments from the sugar mills since the last 18-24 months.

4- Even the sugar mills are suffering great losses because the floor price set by the government is higher than the market prices of 21cents - 25 cents average. (check the balance sheet of indian sugar companies such as RENUKA SUGARS, BALLRAMPUR CHINI on magnum.co.in or bseindia.com) and you will see the huge losses they are suffering.

5- Hence, the situation is such that the Mills are in losses and the farmers are in BIGGER losses. In such a scenario, I do not see how the prodcuction will rise or even stay at the same levels of 25.5 mln tons next year. The farmers simply do not have any money for planting, fertilizers, maintenance, crop medicines etc.

6- Monsoons are almost impossible to predict....really. Over the last 10 years average, we have not received a single accuratre rain forecast. Hence, by chance the monsoon is below normal, expect a huge disruption in supplies out of India.

 

 

Conclusion- Prices are oversold @ $0.21 cents....they will be great at $0.18-19 cents (thats the area to buy in big quantities). The market is seriously underestimating (or rather they are not aware of the situation with farmer payments in India).....and there is a big chance that Indian production can fall by 15% - 20% - even 30% next year.

 

Great time to be accumulating sugar. Lets hope we get prices below 19 cents soon... thats the time to "BUY & HOLD".

 

 

Cheers

Neil Bahal

 

 

 

 

 

 

 

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2 Replies
Neil991
Contributor

Re: Sugar Futures set for big upmove --> $0.28 - $0.30 (people do not know problems brewing in In

Hey guys,

 

Sorry forgot to mention...

 

This is not an overnight trade or something.....I believe this trade will last for the next 5-7 months. But we will get amazing prices when big traders and analysts start realizing that India will remain absent in the international market as an exporter for the next many months.

 

Who knows what will happen to prices if India has to actually import sugar next year? (there just isnt enough inventory worldwide to supply sugar to India and its 1.3 billion people). We can gobble the entire Thai crop easily for breakfast lol.

 

 

Regards

Neil

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hardnox604008
Advisor

Re: Sugar Futures set for big upmove --> $0.28 - $0.30 (people do not know problems brewing in In

Thanks for the input.

 

I'd actually been looking for a short entry point based entirely on techincal action. Can't say that I still won't but additional opinion is always worth having.

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