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Our Bureau

Speculation over Centre increasing buffer stock limit, Brazil harvest

Mumbai May 24 Sugar futures on NCDEX on Thursday gained 2.14 per cent to rise to Rs 1,291 a quintal on unconfirmed news that the Government may raise buffer stock limit from 20 lakh tonnes to 50 lakh tonnes.

Spot price of sugar in Mumbai markets was also high by Rs 50 at Rs 1,350 per quintal.

Fear of a slowdown in sugar harvesting in Brazil, the world's top grower, due to unfavourable weather conditions pushed up prices on the global markets.

Moist and cold weather during the next 10 days in south-eastern state of Sao Paulo, where 60 per cent of Brazil's sugar cane is grown, may hit harvesting.

The delay in harvesting is likely to slowdown sugar supplies. Refined sugar futures in early trades on the Euronext.liffe exchange in London gained 60 cents to $335.60 per tonne.

Brazilian produce

"Brazilian cane farmers usually wait for dry weather to harvest.

Cold and moisture reduce the cane's sucrose, the substance from which sugar and ethanol, an alternative fuel, can be made. However, except for small upturns, sugar dynamics is still bearish," said Mr Harish Galipalli, Head of Research, Karvy Commodities.

Brazil is expected to produce a record 513.1 million tonnes (mt) of cane, up from 455.3 mt in 2006.

Bumper crop

Bumper crops from Brazil and India have pushed global prices 24 per cent lower in the past 12 months.

In India, sugar production in 2005-06 season is seen topping the earlier estimate of 27.5 mt.

According to an industry source, production of 22 mt has already been achieved by the end of April.

With one more month to go for the end of crushing, the total output will cross 26 mt.

The country produced 19.3 mt in 2005-06 season.

More Stories on : Sugar | Commodity Exchanges

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