World heading for 1st sugar production deficit in 4 yrs

May 22nd, 2014

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Category: Sugar

(Moneycontrol) – Reports have been suggesting that the world may have headed for its first sugar production deficit in four years, more so evidently since the last few days.

After having gained 15 percent since the end of January, raw sugar futures may further jump 14 percent by year-end given there is in fact, a global sugar deficit.

The main cause for the same roots to Brazil, which accounted for nearly 28 percent of the global output last year and 57 percent of exports, had its driest summer in the last seven decades. Lack of production will cause an increase in prices.

Indian sugar prices went down to as low as nearly Rs 17 per kg and from there, they have started bouncing up, now trading at around Rs 23-24 a kilogram.

Experts suggest a bump up in terms of the prices pinned with favourable political scenario in the Indian markets.

A resurge from those levels are helping most of the stocks. There are buyers who have been buying sugar stocks indicating an up move in the sugar industry from its worst phase.

The global sugar prices may be seen moving at much higher levels, from the current high levels, given the scenario in Brazil is factual.

This in fact is causing the uptick in most sugar stocks. Furthermore, results from most sugar companies have been quite good in the last few days, whether it was  Balrampur Chini, which reported first time profit of nearly Rs 200 crore or  Dhampur Sugar Mills Ltd that  reported a profit of nearly Rs 50 crore compared to a loss of nearly Rs 1-2 crore.

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