Sugar futures surged by almost 7% in the last 2 weeks on reports of lower output in India coupled with better demand in the physical markets. Also, restricted supplies in the last 3-4 days due to ongoing nation wide trucker’s strike supported the prices.
However, Indian cabinet is likely to approve the proposal to relax duty-free imports of raw sugar against advance licenses (AL) by allowing it on a ‘tonne-to-tonne’ basis till September 30. This may keep Sugar prices under pressure in the short term.
As per initial estimates regarding availability of cane, 2008-09 seemed to be a reasonably comfortable season. However, recent reports from some of the States indicate that the sugarcane availability would be substantially less than what was estimated earlier.
Thus, from the medium term (February) prospective, fundamentals for Sugar remain strong due to lower production estimates in the India.
Technical Analysis
Sugar prices (NCDEX Feb 09 Contract) close at Rs. 1987 per quintal against the previous close of Rs. 1975 per qtl.
Prices closed below its 5 days SMA, but above its 20 days and 65 days SMA indicating a sideways to uptrend. RSI at 53.42 is currently in a neutral zone.
Candlestick chart has shown reversal pattern on daily charts. Thus some correction is expected in the intraday session. However, buying on dips is suggested as trend remains bullish.
Source : CommodityOnline