Sugar Futures on NCDEX closed higher last week on reports that sugar production in the country set to dip to seven-year low this season due to shortage of cane which will lead to early closure of sugar crushing. Raw sugar futures on ICE closed higher last week as the market participants anticipated India might import sugar.
Drought has curtailed production in the western state of Maharashtra and the southern state of Karnataka, boosting domestic prices and raising the prospect of Indian imports.
Moreover, as per CFTC data, speculators upped their bullish stance in raw sugar by 3,747 contracts to 161,630 in the week to Jan. 17.
We expect sugar prices to trade higher on reports that sugar traders called for duty free import of raw sugar for millers. Moreover, there is good physical demand from the industrial buyers and stockists.