It will also mean that sugar prices will fall sharply in the interim. However next year the prices will in all probability rise even more sharply as the companies won’t have any buffer stock with them. We have to see what the govt does next year to reign in the prices.
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I dont see major negative in it.market already discounting that as it was in news for few weeks…n pulses going down is also good for us…as govt will also be little relieved and will go little less after sugar after few months as pulses prices are going to crash within a month now…
Few weeks pain is still left before Q2 COUNTDOWN begins…
Mills offloading in peak season at exmill of 35/-and above (prices not gonna drop much due to looming deficit) will give huge profits…it is good that they will sell good amount of inventory and making sureshot Q2 bumper results.matter of few weeks and sugar stocks may be back on their feet.
Regards
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The govt move will force the sugar companies to liquidate the inventory and may reduce their profits from expected gains.
But these steps will not prevent rising of sugar prices in the future. If the inventory goes down, and the sugar availability for the next season remains low, the prices are bound to increase anyhow and will help the company to improve their profitability going forward.
I am waiting for sugarcane prices from UP govt for upcoming season.
Also, hoping that the govts don’t come out with any draconian and industry stifling measures like selling of stock at pre-determined prices.
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Govt is looking for this festive season…selling of inventory will invite big trouble in 2017 due to eveey less inventory
Govt actions are shortssighted it seems…
They are consuming things that is believed to be in shortage in next year…lol
Regards
Govt in India in well known for pulling out these kind of tricks. First give export incentive to export sugar out from the country when it is almost clear that drought has affected sugarcane in Maharashtra and Karnataka. End result around 1.5 million tonne sugar left the country now moving in reverse direction and after few months not be surprised if Govt allow same amount of import of sugar at double the price at which export has happened. End result loss to farmers, loss to sugar companies, gain to few govt people from commission in sugar trade and story repeated till next cycle. Even sugar mills and farmers are also equally to be blamed for this kind of mess as on drop of hat they go for lobbying with politicians believing that they have some trick to improve the situation where in reality they has none and just compound the problem even further for all stakeholders. We are still living in socialist and communist era while already it was removed from other part of world long time back.
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I have been saying that whenever in any doubt about the sugar rally, it is better to monitor its progress through the daily sugar spot price in the whole sale market…that’s the only price that gives us the most clear picture of the sugar price trends…
As of now, the SUGARMDEL (spot price in delhi market) which had risen to around 3925 in late July and early August is under consolidation since first week of August…it correctedto around 3792 and has now bounced to 3830…
The sugar price has good support @ 3821 and appears to now destined to move sideways for next 2-4 weeks…once it moves above 3842, it comes to the safe zone…It has very strong support @ 3728…but I do not think that it may fall as low as that level…
The sugar price has fallen exactly to 40 RSI level on daily charts and bounced from that level…it clearly is in a bull market and this correction is nothing but a bull market correction / consolidation…
Fundamentally, even the Govt appears to be agreeable to a price of around 3800 range …and technically too there is no reason for it to fall to 3728 levels…
So expect a sideways movement in Sugar for next 2-4 (or even 6 weeks) weeks and as and when sugar shows signs of a breakout, I will post the relevant charts on this forum… Prices may again start rising from mid Oct onwards when the festival season buying by bulk buyers is completed…and the restriction period on holding by mills is about to end.
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Technical patterns wise as of now the current consolidation is quite similar to the one in Nov 2015 and April / May 2106…therefore it wont be such a surprise to see the rally resume in Oct…
So guys …relax…don’t speculate too much on the impact of govt measures…most of it already priced in…let the market decide the sugar price and we will just analyse the market decision and act accordingly…
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My only fear is that farmers might milk this situation and demand for an absurdly high cane SAP in up. And the government might give in to their demands reason being an election year in UP. That would yield to down circuit in solid stocks like balrampur
Guys…don’t be so despondent…today there was no fall in the sugar delivery price …in fact SUGARMDEL rose by 13 rupees from 3830 to 3843…as long as sugar prices are up, sugar stocks will turnaround eventually…its a matter of time
Infact one more Negative out of way::
Sugar steady on stock limit reports.
also read this …experts view from renuka balram n ISMA.
At the Max the side ways movement in sugar stocks will last till October end. The next rally will be even more ferocious than the one witnessed in the last one year.
October end is too long.i belive reversal coming in 10-15 days.festive mood and Q2 countdown will begin in sept end.yes expecting a good sharp rally before diwali…results to coincide with diwali…when traders will rush back to sugar…these shares are capable n history lf moving 40-50% in a week very easily
Murkumbi has two huge port based sugar refineries…he imports (duty free) raw sugar and exports refined sugar…but he is not allowed to sell the refined sugar in India. But if the import of sugar is allowed duty free in India, then Narender Murkumbi can sell his refined sugar in domestic market for a huge profit. That’s the reason why he is deviating from the official stand of ISMA and giving projections of big sugar shortage and huge price rise in sugar. He obviously wants the import duty on sugar to be lowered and stands to gai significantly if it happens. I wont be surprised if in anticipation of sugar import permission, he is stocking sugar in his refineries.
On the other hand, ISMA is obviously down playing the impact of sugar deficit and rising sugar prices for the next 2 years. ISMA does not want sugar imports to be allowed duty free. They want the prices of sugar to rise (gradually…without causing discomfort to govt) and the indian sugar mills to benefit. Now they have come out with the argument that any talk of sugar import now is premature…the govt should wait for the final figures to come out in April 2017 and then take a decision on allowing sugar imports.
If we analyse the stands of both the above parties, the it appears that the truth lies somewhere in between… It appears that
- The sugar production next year will be less than the one projected by ISMA…it can be around 21-22 million tons.
- There will be good rise in sugar price in India from October onwards …after the festival season and stock holding limit ceases to be in force
- There will be some 2-3 million tons of sugar imports in June / July 2017 onwards…
- The govt is agreeable to a gradual rise in price of sugar and is taking all the steps which appear to be good on paper but does not actually amount to much. This may have something to do with UP elections in the next year.
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good morning sir,
you are the one who started the thread and predicted the SUGAR Cycle perfectly…
Sir it has been long since you posted here… whats your view on SUGAR CYCLE now…i think everyone would like to hear from you and your expert views.
Thanks.
Regards
Deepak,
It’s all perception :). Please don’t Sir anyone at VP - we are all learners here.
I am a novice in Sugar cycles, and will remain one. I found it too hard to understand and be on top of, global demand-supply, Indian government regulations, state level decisions/MSPs which are all too dynamic - for me to keep faith in (when the going gets tough).
I exited long time back :), after flirting with this for close to 6-9 months.
Decided Sugar Cycle - not my circle of competence!!
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In the interview, Majoj Saoroji has said that suga rinventory stock held by balrampur Chini would be lower than that mandated by the Central Govt for the months of Sept and Oct…and Abhinash Varma of ISMA has said that except for a very few mills, the rest of the sugar mills have not been holding back any sugar stock.
We already know that Mills of South India (TN, ANDHRA) do not carry much inventory…now it appears that most of the UP mills too have been regularly releasing sugar in domestic market.
Therefore, the limits imposed by the Govt for the two festival months of Sept and Oct would apply primarily against the cooperative sugar mills of Maharashtra and the private mills of Karnataka. These mills will now be forced to sell their sugar inventory in the market.
And perhaps an unintended consequence of the central govt notification would be that UP based mills like Balrampur which have been regularly selling sugar stocks can now go slow as long as they stay within the govt prescribed limits…the UP mills can now afford to hold back some sugar inventory…and sell it later, perhaps at 1-2 rupees of extra from the present price…As of now, they are getting 35.5 - 36 rupees…
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Medium term outlook for sugar industry in India is positive as per latest report by CARE. Care report on outlook for Indian sugar industry
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Please prove it with proper data points. Valupickr is not supposed to a boasting platform like some other sites.
you have already spoken about buffer stock with them earlier, what is the point in reiterating your views again and again as new post without any additional data points.
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Hello Sir,
Any view on the demerger scheme of Triveni which was approved by shareholders on 3rd of Sept?
Thanks
Sorry…don’t know much about when the demerger is to be effected…I think before demerger, the company will announce the date.