Sugar –Monthly Report - TransGraph€¦ · © TransGraph Consulting Pvt Ltd Slide Contents •Technical Analysis Sugar Kolhapur –S 30 ICE Sugar 11 Gur Chaku –Muzzaffarnagar

Sugar Outlook

10th Oct’2013

© TransGraph Consulting Pvt Ltd Slide

Summary

• Indian sugar prices traded negative in the concluded month on the back of aggressive offloading by the millers at the lower prices.

• Indian sugar prices are likely to show support in the coming days on the back of likely improvement in the retail off take for the festive season.

• ICE sugar prices are trading positively from past month owing to continuous rain in Brazil and hence anticipation of cane damage is likely to keep the prices in positive direction.

2


Contents

• Technical Analysis

Sugar Kolhapur –S 30

ICE Sugar 11

Gur Chaku –Muzzaffarnagar

• Fundamental Analysis

Price movement

Cane cost

Import & Export

Global scenario

Critical Factors

3


Sugar S-30 Kolhapur…Elliott Wave Analysis

Sugar S-30 Kolhapur prices are extending lower as the long term weakness from the Aug’12 high of INR 3677 is intact. According to the preferred Elliott wave count, prices are extending lower as minor wave 5 of intermediate wave c of the Primary wave 2. Within the same a test of INR 2750/2730 remains open ahead of a recovery in the coming months.

4


ICE Sugar 11 Futures…Elliott Wave Analysis

ICE Sugar Futures prices are bouncing back from 16 cents after forming a base. Possibility of further gains towards 20.50 cents remains open ahead of prices turning lower towards 17.50 cents in the coming month. Subsequently prices could attempt a gradual recovery.

5


Jaggery / Gur

• Gur/Jaggery Muzzaffarnagar prices upon staying above INR 2900 are witnessing an upside correction. Within the same a test of INR 3050 remains open ahead of prices turning lower towards INR 2900 and lower in the months ahead.

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Fundamental summary


What happened to prices and why?

The Indian Sugar prices traded continuously under pressure because of Sentiments about sugar production in the upcoming year to cross 25 million tons

against the anticipation of 23.70 million tons by ISMA.

Reduction in the offer rates by the millers i.e. a fortnight ago they were offering S-grade sugar near INR 2870 per quintal whereas now they are selling it below INR 2750 per quintal.

Continuous pressure by the Govt. & Farmers for clearing the cane dues of near INR 2300 crores is forcing them to liquidate stocks aggressively in the market.

Protest are going on in MH & UP for hike in cane prices. Farmers are demanding

prices to be near INR 320/350 per quintal against INR230/250 per quintal of past year in MH.

Appreciation in INR from 69 to 62 against dollar kept the parity on verge.

8


Price movement till now

Cane Cost and sugar cost of production

Exports ( Raw & Refined) & Imports

Expected Parities

Brazil cane crushing status

Other Global scenario

Critical factors for Indian sugar

Summary

Lets check out

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S-30 Price Movement

• The sugar prices tested their lowest level since 2013 in this concluded month on the back of sentiments about increase in the sugar output from anticipation of 23.7 million tons to 25 million tons by ISMA.

10


Ending stocks & Price Movement

• The likely ending stocks of 2.05 million tons against 4.03 million tons of previous year and sam is likely to support the prices in the later half of the year 2014.

4.46 3.94 10.14

9.04

2.94 3.54 4.202 2.702 4.03 2.05

3460

1000

1500

2000

2500

3000

3500

4000

4500

0

2

4

6

8

10

12

INR / QtlMln Tons

Ending Stocks(mt) M-30 Sugar prices(INR/Qtl)

Muzaffarnagar Sugar Prices and Ending stocks

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Cane Cost - State wise

The cane cost is likely to increase in all the states , cane prices in UP is likely to be higher among all the states, the cane prices may be above INR 300 per quintal in UP which will be higher by near 7.5% against previous year.

275300

280250 260 270

0

50

100

150

200

250

300

350

Punjab UP MH TN KA APINR / Qtl

2010-11 2011-12 2012-13 2013-14 (E)

Statewise Sugarcane SAP / FRP Prices

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Cost of production - Maharashtra

Maharashtra Attributes Details Cost in INR

Cane cost FRP for 13/14 is fixed at 210/qtl of cane. This is for 9.5% recovery

Estimated millers prices at 11.4% recovery 2800

Harvesting & Transportation charges 600

Processing cost 500

Fixed costs 441

Total Cost 4341

Realization from by-products 688

Cost after taking out by-product realization 3654

Per quintal sugar production cost ( @ 11.4 % recovery) 3205

Considering cane cost at INR 280 per quintal the cost of production is still below the prevailing prices which is likely to ruin the millers situation in the coming year.

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Cost of Production -UP

Uttar Pradesh

Attributes Details Cost in INR

Cane cost

SAP for 13/14 estimated at 300/qtl of cane.

3000

irrespective of SAP, Avg. exp price paid by millers per ton @ 9.2% recovery

2800

Harvesting & Transportation charges 400

Processing cost 450 Fixed costs 471 Total Cost 4121 Realization from by-products 688 Cost after taking out by-product realization 3433 Per quintal sugar production cost (@9.4% recovery) 3732

The cost of Production at UP in the last year was near INR 3600 per quintal and due to likely improvement in the cane prices the cost of production is estimated to touch INR 3732 per quintal of Sugar.

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India -Imports and Exports – Sept’13

• September Exports are disappointing as INR has stabilized near 62 levels whereas parity exists above 60 levels against dollar.

• Total exports for 2012-13 marketing year are near 0.48 million tons against anticipation of 0.55 million tons.

0.35 0.70

1.41 1.91

0.6

4.97

0

1

2

3

4

5

6

Oct -12-May -13 June July August Sep Total

Total Sugar Exports (Lakh tons)

0.07 0.09 0.14 0.52

0.14 0.63

1.32 1.77

0.08

4.83

0

1

2

3

4

5

6

June July August Sep Total

Raw Refined

Raw and Refined Exports (Lakh tons)

12.7

2.24 1.37 1.14 0.87

17.44

0 2 4 6 8

10 12 14 16 18 20

Oct-May June July August September Total

Total Sugar Imports (Lakh tons)

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CIF Sugar Prices at Middle east

• Increment in global raw sugar prices and appreciation in INR against dollar has made the exports race much competitive for Indian exporters against Brazil and Thailand.

-100.00

-80.00

-60.00

-40.00

-20.00

0.00

20.00

40.00

60.00

80.00

2-Apr 2-May 2-Jun 2-Jul 2-Aug 2-Sep

Parity India agianst Brazil Parity India Thailand Parity Brazil- Thailand

Export Parity Indian Sugar (CIF Price at Middle East)

CIF Prices as on 30.09.2013 at Middle East ( $)

India Brazil Thailand

525.44 526.25 520.90

The CIF prices are calculated by TG estimates and developed market intelligence

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Indian Sugar Balance Sheet

The sugar production in the current year is expected to be near 23.2 million tons though Indian cane growing region s have received ample rainfall. The likely decline in sugar millers participation in UP due to riots and financial weakness may keep some cane uncrushed in UP.

Sr.No Attributes 2012-13 2013-14 % Change 2014-15E

1 Beginning Stocks 2.7 4.03 49.26% 2.05

2 Total Sugar Production 24.52 23.21 -5.34% 25.91

3 Imports 1.72 1.00 -41.86% 1.5

4 Total Supply 28.94 28.24 -2.42% 29.46

5 Exports 0.61 1.40 129.51% 1.3

6 Consumption 24.3 24.79 2.02% 25.29

7 Total Demand 24.91 26.19 5.14% 26.59

8 Ending Stocks 4.03 2.05 -49.13% 2.88

9 S/C ratio 17% 8% 11%

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Global Happenings


Brazil sugar Output

South central Brazil - Production till 30th

September

Attribute 2012 2013

Cane crushing (million tons) 381.35 440.43

Sugar production (million tons) 24.0 25.2

Ethanol (million litres) 15.12 18.83

Cane diversion towards ethanol 50.50% 55.03%

Cane diversion towards sugar 49.41% 45.14%

Units in million Tons and million litres Source- UNICA

The Cane crushing at Brazil has been halted due to rainy weather in the Southern central region and same has impacted on the cane output, furthermore the data for October month is likely to show lower sugar output.

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Brazil

• Cane diversion to sugar remained near 45.14% against 49.41%, however due to bumper cane output the sugar production may not hit lower levels against previous year.

• Due to rainy weather, cane output is expected to decline from the anticipation of 589.5 million tons 587 million tons and considering 47% diversion to sugar, the sugar output may decline by near one million tons from the anticipation of 35.5 million tons in the south central region of Brazil.

• The port congestion due to rains is likely to impact the record delivery of the 1.4 million tons of raw sugar of ICE Oct’13 contract from Brazil.

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Brazil Exports

• Total sugar exports from Brazil till date are 12 million tons against 1.2 million tons in past year.

• Total sugar exports last year were near 26.7 million tons and same is expected to be near 29.3 million tons.

• Total ethanol exports are 25.8% higher against previous year till date to 340.56 Cu.mtrs

1715

18 19

27 26

0

5

10

15

20

25

30

Apr May Jun Jul Aug Sept

2012 2013

Sugar Exports (Lakh Tons)

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Other Global significant changes

• Russian sugar production till 4th Oct’13 stood near 1.18 million tons against 1.48 million tons in the previous year for the same period, the total sugar production at Russia this year is expected to be near 4 million tons which is near 15.85% lower than previous year .

• Thailand sugar production is expected to be near 11 million tons against 10.2 million tons and same is expected to boost the sugar exports from Thailand, the Thai crushing season has started from this month and the producers have started quoting the prices for the sugar from the new crop.

• Indonesia sugar imports may cross 5 million tons against 2.5 million tons in the previous year on the back of increased demand from the food and beverage industry.

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Global Sugar Production summary

The sugar production at Mexico , USA is likely to be lower than previous year due to prevailing lower prices, production in Thailand is expected to be higher by 0.80 million tons.

1.50

-1.320.32

0.08

0.80

-0.21

-0.40-0.30

-0.17

0.40

0.00

0.10

-0.40

0.20

0.10

0.10

0.05

-0.31

-1.50 -1.00 -0.50 0.00 0.50 1.00 1.50 2.00

Brazil

India

EU-27

China

Thailand

United States

Mexico

Russia

Pakistan

Australia

Guatemala

Philippines

Ukraine

Colombia

Turkey

South Africa

Argentina

Others

World Sugar Production scenario for 2012-13 Vs 2013-14

Global sugar production in 2013-14 expected to be higher

by 0.13 % to 174.49 mt

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Critical Fundamental factors ahead

• Cane Cost in MH & UP The current protest in UP may force UP govt to keep the cane cost above INR 300 per quintal against INR 280 per quintal and same shall decline the number of active mills in this year which shall impact negative on sugar output. Rising demand for Molasses for ethanol. The millers may like to go for higher molasses recovery than sugar due to rising demand for ethanol & molasses due to implementation of 5% ethanol blending with petrol in India.

• INR INR has bottomed till 69 in the past month, moving ahead, Due

to US shutdown it has recovered till 62 levels and same shall provide the parity, however further weakness in dollar shall keep the parity on the verge.

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Sugar –Monthly Report - TransGraph€¦ · © TransGraph Consulting Pvt Ltd Slide Contents •Technical Analysis Sugar Kolhapur –S 30 ICE Sugar 11 Gur Chaku –Muzzaffarnagar

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