I exited my positions as well…If the prices go up, I may miss the upside,
but if they do gown, atleast I will not lose my capital…Right now a bit
of uncertainity around the future of sugar production and prices…as
different studies/reports predicting different outcomes…playing it safe
for now as markets keep presenting better opportunities in future…
UP sugar mills including dhampur , triveni are maintaining ISMAs rhetoric. They will continue to downplay the deficit as far as possible and hope to keep imports to the minimum possible. A sky rocketing sugar price is also not in their best interests.
Regarding opening stock,The industry’s estimate of over 7 mt of opening stock, has to be taken with a lumpy pinch of salt because there is no guarantee that what is shown on the stock register is actually physically available in the warehouses. You just have to take ISMAs word !
In 2015-16 ISMA managed to create a surplus out of the deficit situation and successfully push exports.
Thailand-to-stop-sugar-subsidy-by-year-end
http://www.bangkokpost.com/business/news/1202384/thailand-to-stop-sugar-subsidy-by-year-end
To import or not to import
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La Nino Vs El Nino
If it’s La Nino or El Nino - What impact do we see in current SS. I guess it would not impact this year SS, as it would be seen by next SS. Does this mean this sugar cycle is stretching to another season?
Global sugar reserves are quite low…hence sugar is quite vulnerable to weather disturbances now…as it is there wont be any recovery in sugarcane plantation in Karnataka and tamil nadu in the present sowing season due to drought.
This season India is set to produce 20.5 million tons…UP produced excess sugar due to closure of cash based jaggary industry due to demonetization affect. Hence, for the next sugar season, UP will not produce more sugar cane than this year…it may be either same figure or even less due to diversion of sugarcane to jiggery industry.
In the present season, Maharashtra, produced 4.5 million tons…for the next sugar season even if the sugar production bounces back to 9 million tons…even then the total sugar production in India in the next sugar season will be around 24.5 - 25 million tons.
Therefore, sugar prices will remain elevated in the next sugar season too…but the profits of sugar mills may be around this years figures due to increase in SAP for sugarcane for next sugar season. Thus from now onwards, the less debt sugar mills such as Dalmia and Balrampur and Dhampur will run more than the heavily indebted ones.
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La nino - Brings plentiful rain
El nino - Brings drought
2016 monsoon was a LA nino year. 2017 monsoon will not be a LA nino year, if el nino prediction proves correct, and of there is scanty rain, we will have a extended up cycle.
“an evolving El Niño is much worse than a full-fledged one and in the past, an evolving El Niño is known to have caused equal harm to the southwest monsoon just like the the full-fledged ones. Eighty per cent of El Niño years has seen below-normal rains , while 60 per cent have been outright drought years. “This is precisely what I have been saying that if weather models are predicting emergence of El Niño during the fag end of the southwest monsoon season, it means that El Niño would be evolving when Indian monsoon is at its peak,” Jatin Singh, CEO of private weather forecasting agency, Skymet Weather Services, said."
Right now it’s wishful thinking to make a investment decision based on this…let us just be prepared.
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that is what i am trying to ask…in both the cases effect would be visible by next SS…correct??
Also one quick query: In all this import talks , i am curious to know if India decides to Import ‘Processed Sugar’ not the ‘Raw Sugar’ how will the market react…rather how should the market react?
We exported around 0.7 -0.9 MT processed sugar last year despite forecast of shortfall and then only sugar prices started to rise and stocks started the upward climb. If Around March or April this year if we import processed sugar would this lead to downward journey or stocks would maintain at current levels.
I spoke to some friends and as per them we have not imported processed sugar, we always import raw sugar which is then processed and then sold.
If we import processed sugar then i guess no need to take off import duty as it is on import of raw sugar…correct? This way sugar companies will not be hurt and govt can keep a balance…
I am correct??
All imports are in raw sugar. No distinction made for processed sugar imports. Duty applies to all.
Thanks Sreenath!! This is what i was trying to understand.
But as i asked earlier: Importing Raw sugar for processing and keeping some for domestic consumption and exporting the remainder would harm profits of sugar companies as all are predicting.
What if limited import of sugar white is allowed to be imported to be kept as a buffer for consumption, would this still hurt companies profit or the crucial fact payment to sugar companies…
Trying to add puzzle together 
The above clipping assumes the import would be from Brazil, there was another article where chairman of AISTA said
Now let’s safe assume raw-sugar is indeed imported from Dubai or Thailand…in this way the cost in above clipping would be lower for sure and cheaper then price in India…correct?
So import from Brazil/Dubai or Thailand would mainly decide the fate of this 2017…makes sense?
Dubai ,Thailand or Brazil the prices aren’t going to vary much, it will be close to the international price. The price would only firm up if India starts importing.
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Renuka has port based refineries…it imports raw sugar duty free and processes it and exports it…if it wants to sell sugar in the domestic market, then it has to pay tax equal to the import duty.
If import duty is abolished, the renuka instead of exporting its sugar simply sells it in the domestic market…that’s why Renuka will be the first and prime beneficiary of abolition of import duty on sugar…and that why Murkhumbi has been saying that India needs to import sugar since past few months…
If India allows sugar imports after the crusghing season is over and the mills are closed, then it will take some time for the port based sugar mills to restart their operations…and if the profit potential is not much, then they may not even go for any imports…Again in such a scenario too, Renuka will be the prime beneficiary…
If the mills import sugar, then it will be raw sugar…if traders import sugar then it will be white sugar…
For traders to import sugar in a big way…First, it should be after crushing season and when sugar mills are closed…secondly, it should be from nearby ports such as Dubai (or western India traders) or bankock (for east indian traders) to reduce the shipment time…
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Worth a read and hear( small video too)
2nd Feb 2017 - 20.22 cents/pounds
27th Feb 2017 - 19.12 cents/pounds
Any views on KM Sugar. It announced plans to raise Rs.100cr equity funds at Rs.50 per share when current price is Rs.28 only. Very high RoE and RoCE.
Hi Mehnazfatima,
How Dhampur Sugar is looking now technically? Since Q3 good results stock is corrected considerable (from 210 to 188). Any other factor pulling the prize down? - UP election, Profit booking etc.
Regards,
Vinoth
Good times ahead for UP mills.
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