"Don't
tell me the moon is shining; show me the glint of light on broken glass."
Anton
Chekhov
(Russian, 1860-1904)
(Russian, 1860-1904)
Word for the day
Saporific (adj)
Producing or imparting
flavor or taste.
(Source: Dictionary.com)
Malice towards none
Indian
banking industry has emerged as the epitome of women power.
Some
pigeons are still in denial.
First random thought this morning
The Chhath was celebrated in Delhi
this time at much larger scale as compared with past years. Though, this was
the trend for Ganpati and Durga Puja celebrations also, Chhath assumed much
larger significance in view of the recently concluded Bihar elections.
No wonder one overenthusiastic
Bihari friend was heard evoking Nostradamus to suggest that a worshiper of Sun
will rule India and make it a global power. The query - "Where does the
French oracle say this?" - my friend finds completely unworthy of an
answer!
only for the brave hearts!
Indian consumers and producers materially influence the global
prices of many commodities. For example, being one of the largest importers of
certain crop nutrients, Indian demand plays an important role in determining
the global prices of Urea etc. Indian consumption demand also materially
influence the global prices of gold. Likewise, Indian production level
influences the global prices of cotton, sugar, etc.
In recent decade, India has also emerged as one of the major
importer of pulses. The rising preference and affordability for protein
consumption has led to material rise in consumption of pulses in past decade or
so. The rise in domestic production of pulses has however not kept pace with
the demand.
Sugar is perhaps the only commodity where the Indian demand and
supply both exercise influence on global prices. Whereas the domestic
consumption is rising at a steady rate of ~2%, the supply of sugar keeps
fluctuating with monsoon.
India is the world's largest consumer of sugar accounting for ~15%
of global consumption. We currently consume ~26mt of sweetener every year. The
consumption is likely to rise to 29.3mt by 2019-20.
As per the claims made by industry bodies, after textile, INR800bn
Indian sugar industry is the largest employer in the country. It therefore may
sound enigmatic that Indian sugar industry has not seen any worthwhile
investment in past one decade. The domestic production in current year may be
the same as it was in 2008. Many sugar mills are burdened with huge debt. They
are not able to pay cane farmers in time.
Falling crude oil prices and low domestic merchant power rates
also cap the earnings of domestic sugar mills from sale of ethanol (bio-fuel)
and co-generated power.
Given these circumstances, the phenomenal rise in stock prices of
sugar producers' in past couple of months is noteworthy. A large part of the
rise in stock prices may be attributed to the 40% rise in global sugar prices
since August lows, due to poor Brazilian crop. Excessive pessimism over the
industry's health in past couple of years and optimism over positive policy
framework changes may also have contributed to the traders' sentiments.
The government appear to have initiated some steps to support the
ailing sugar industry. Financial support for settling cane farmers' dues,
export incentives and promise to look into cane price rationalization are some
of the steps.
India, which has had a big impact on global sugar prices because
of swings between being a net importer and a net exporter of the sweetener, is
set for a sustained period as a net exporter in coming years. As per official
estimates a surplus is expected in the next few years at least. The Indian
exports will thus cap the global sugar prices in next few years.
I do not see myself investing in this sector in foreseeable future. It is
only for the brave hearts!
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