Indian sugar industry to struggle in 2008 : [Source: Dow Jones Newswire]

Indian sugar industry to struggle in 2008: Report

The Indian sugar industry will struggle with low sugar prices and large domestic stockpiles in the coming year, according to a report released by United Kingdom-based Czarnikow Sugar Friday.

"There is no question that 2008 will prove to be a difficult year for the Indian sugar industry," said Czarnikow. Earlier this year front-month New York world raw sugar futures dropped to a low of 8.36 cents a pound, down from the historical high of 19.73 cents. Ahead of the US Thanksgiving holiday that contract closed at 9.76 cents. Indian's sugar exports are expected to rise on the year, but stocks will still continue to grow due to a further rise in production, the report said. "This will squeeze industry cash flows and lead to a rise in cane payment arrears," said Czarnikow.

Czarnikow did revise down its forecast for India's 2007-08 output by 1.3 million metric tons (raw value) to 32.5 million tons. However this is still 1.3 million tons higher than last season and remains a record high.

Even though some farmers will switch to other crops such as wheat, corn and rice to trim output, it still take India time to chip away at its excess supplies. Because the bulk of the world's sugar surplus is located in India, Czarnikow expects world sugar prices to be dictated by India's export pace.
[Source: Dow Jones Newswire]

Spices

In a desperate move to overcome some of the heavy losses that were incurred during the last three session, black pepper and jeera futures managed to switch over to the green territory and accumulated sharp gains Saturday. The futures got support from fresh buying and short-covering by speculators and traders on the National Commodity and Derivatives Exchange [NCDEX]. Turmeric futures too ended with marginal gains, but turmeric remained in the red zone and closed with losses.

In the similar manner, jeera futures too managed to overcome some of the previous losses and closed higher. Jeera futures had lost almost nine-to-ten per cent during the last three days.

RefSoya Oil

Indian vegetable oilseed and oil futures closed higher riding on the strong gains in the global markets Saturday. The US soybean closed at 34-year high Friday night, while soy oil closed at a new contract high. Malaysian palm oil futures had also closed yesterday higher yesterday breaking records for both intraday and closing highs.

US soy complex made sharp gains on Friday night supported by export demand, gains in crude oil and technical buying. The USDA weekly export sales report showed increase in exports of soybean and oil. Soybean closed at a 34-year high on technical buying, after the underlying strength in the market made it to cross a 19-year high of $ 10.99 ½.