Archive for October 23rd, 2009

Sweetness Of Sugar – Part 1 :)

Hello Friends here we come up with our another write up on “Commodity Corner Series” 🙂

Sweetness of Sugar

Sweetness of Sugar

We would touch upon aspects like seasonality,cyclic nature and analysis of price trend of Sugar.

The Commodity

Sugar is the most plentiful economic sweetener and India’s second largest agro-processing industry.

There are more than 600 installed sugar mills in the country.

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The Seasonality & Cyclic Nature

The crushing season in the country generally starts from October and reaches its peak in January before March end or April of the next year.

It has been seen that during this period, supply arrives in the market and resultantly prices starts falling.

The cyclic pattern of the sugar industry lasts for 3-5 years.

Currently, the domestic sugar market is entering into a severe shortage phase due to sharp decline in production.

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Analysis Of Price Trend

Tracking short term movements as well as the longer term trends seen in and over the last years, one can analyse and assess its prices.

Since 2006, Sugar has been widely talked displaying a continuous bullish rally both in domestic & international market.

In domestic markets, Sugar prices remained bearish in the most part of the year 2007.

Prices surged by almost 30% in the first half of 2008 & regained its sweetness with supportive factors like lower production estimates and rise in export demand.

From July 2008 sugar prices have been maintaining its bullish trend.

In January, 2009 sugar prices reached record high levels.

With an eye on the rising prices, the Central Government announced measures with aim to control sugar prices.

In the month of May, 2009 world sugar prices have surged to a near-three year high, on the back of speculative buying by
funds betting on supply shortfalls in India and Pakistan.

Since October (the beginning of the 2008-09 sugar season), prices in spot and futures market have witnessed a bull run due to lower production estimates for the season.

Market has already breached the long term bearish trend line and presently trading in an interim bullish trend channel.

Speculators, and especially large traders, have really embraced the long side of the Sugar market.

The commodity has one of the best fundamental pictures right now and it is getting a good deal of solid buying.
The sugar market is overbought but it seems that it still has room to move higher in the longterm bull market than imagined.

It has been one of the better performers of the commodities market.

The price of Sugar has more than tripled in about 3 years.

Though, Sugar seems set to lose some of its sweetness for consumers in the time to come.

Sugar prices recently touched a 28-year high of 25.39 cents per pound on September 30, 2009.

This is likely to climb up going forward, because imports by countries such as China, Russia, Mexico and India are set to rise. These countries are consuming more, but producing less of the commodity.

Sugar futures tended to do well in these years.
An investor could have increased his return variability in these years without sacrificing any of his return.

Stay Tuned for more on Sugar Market in commodity corner 😉

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India and China Inked a Global Climate Co operation Pact

India and China Inked a Global Climate Co operation Pact

India and China Inked a Global Climate Co operation Pact

In order to cooperate in the fight against climate change, India and China inked a broad agreement and also underlined a common position on controversial talks for a tougher global climate deal.

However, the agreement covers cooperation for action to reduce planet-warming greenhouse gases, transfer of technology and in areas of energy efficiency and renewables, etc.

Further, it is said that China is the world’s top greenhouse gas emitter and India the fourth largest whereas the deal is among many that India is sealing with rich and developing nations to prove its commitment towards sealing a new climate pact to expand or replace the existing Kyoto Protocol.

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Additionally, this agreement holds good for 5 years and was signed by India’s Environment Minister Jairam Ramesh and Xie Zhenhua, vice minister at China‘s National Development and Reform Commission.

Similarly, India signed a deal with Japan this week and has also spoken of cooperation with South Korea, Brazil and the United States.

On the other hand, the India-China agreement stated that developed countries should take the lead in fighting climate change by reducing emissions and providing finance and technology to poorer nations.

US Recession has Ended, Economy Growing Again : Economists

US Recession has Ended, Economy Growing Again

US Recession has Ended, Economy Growing Again

The worst US recession since the Great Depression has ended, but weak household spending as the labour market struggles to create jobs will slow the pace of the economy’s recovery, according to a survey released this month.

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The survey released by the National Association of Business Economists found that  80% of the respondents believed the economy was growing again after four straight quarters of declines.

Experts believe that the recession has ended, but that the economic recovery is likely to be slow.

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The current recession that started in December 2007 is the longest and deepest since the 1930s.

It was triggered by the collapse of the US housing market and the ensuing global credit crisis.

The NABE survey, conducted in September, predicted real GDP growth expanding at a 2.9% pace over the second half of this year.

Output for the whole of 2009 is expected to contract 2.5% and next year, rebound to 2.6%.

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Much of the anticipated recovery was seen driven by businesses rebuilding their inventories after aggressively reducing unwanted stocks of unsold goods to match weak demand.

Investment in the residential market would also add to growth, with most respondents in the survey convinced that housing market downturn was close to coming to an end.

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The survey predicted that the unemployment rate would rise to 10% in the first quarter of 2010 and edge down to 9.5% by the end of that year.

The labor market was not expected to regain most the jobs destroyed in the current recession until 2012 or beyond.

However, the weak labour market would continue to slow down the recovery.

Labour market slack, combined with weak wage growth, meant inflation would not be an obstacle to the economic recovery.

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