India is the world’s largest consumer of sugar – no surprise, in a nation of over 1 billion residents with a notorious sweet tooth. It’s alternately been a net exporter and a net importer of sugar over the past few years, as crops – which depend on the monsoon – have good and bad years.
Kingsman SA, a major sugar broker, says that this year’s surplus may allow the government to free up some of the politically-minded constraints and regulations it has imposed on the sugar industry in recent years.
“This will give the Indian government a window of opportunity to remove some of the constraints on the sugar industry and, in the process, even out the production cycle,” John Kingsman, the managing director of the eponymous firm, told Bloomberg News.
Under the current system, the government supports growers by setting a minimum price for sugarcane, defining the amount of sugar that’s sold each month. It also buys 20 percent of the total production for discounted sales to India’s massive poor population.
India, according to its own Sugar Mills Association, has an outsize effect on the global markets, driving surpluses and deficits in sugar supply around the world. Transitioning to a more liquid, market-based structure could smooth out some of the shifts.
Risk Disclosure
This material is conveyed as a solicitation for entering into a derivatives transaction.
This material has been prepared by a Daniels Trading broker who provides research market commentary and trade recommendations as part of his or her solicitation for accounts and solicitation for trades; however, Daniels Trading does not maintain a research department as defined in CFTC Rule 1.71. Daniels Trading, its principals, brokers and employees may trade in derivatives for their own accounts or for the accounts of others. Due to various factors (such as risk tolerance, margin requirements, trading objectives, short term vs. long term strategies, technical vs. fundamental market analysis, and other factors) such trading may result in the initiation or liquidation of positions that are different from or contrary to the opinions and recommendations contained therein.
Past performance is not necessarily indicative of future performance. The risk of loss in trading futures contracts or commodity options can be substantial, and therefore investors should understand the risks involved in taking leveraged positions and must assume responsibility for the risks associated with such investments and for their results.
Trade recommendations and profit/loss calculations may not include commissions and fees. Please consult your broker for details based on your trading arrangement and commission setup.
You should carefully consider whether such trading is suitable for you in light of your circumstances and financial resources. You should read the "risk disclosure" webpage accessed at www.DanielsTrading.com at the bottom of the homepage. Daniels Trading is not affiliated with nor does it endorse any third-party trading system, newsletter or other similar service. Daniels Trading does not guarantee or verify any performance claims made by such systems or service.
