To study Factors affecting rise in Commodity Prices e.g.

Sugar

Agenda Introduction Literature Review Research Methodology Data Collection & Analysis Conclusion

arbitragers and speculators marketWhat is Commodity Market? A commodity market is a market where various commodities and derivatives products are traded Sugar as a Commodity Sugar is a basic necessity for every human being. Gujarat. Haryana. Orissa etc. Factors influencing Sugar Markets Price Consumer Income Changing eating habits . Karnataka. Bihar. Madhya Pradesh. which investors can trade in the commodity market Its price is determined as a function of its market as a whole Commodities actually offer immense potential to become a separate asset class for market-savvy investors. processed products and agro-based products. Assam. Major Sugar producing areas in India are Andhra Pradesh. Maharashtra. Kerala.What is Commodity? A commodity can be defined as a product or material or any physical substance like food grains. metals or agrocurrencies.

Introduction .

second largest agro-based processing agroindustry after the cotton textiles industry in country. Sugar mills (cooperative. and public) have been instrumental in initiating a number of entrepreneurial activities in rural India. About 4. . has a lion's share in accelerating industrialization process and bringing socio-economic changes in under developed rural socioareas.Indian sugar industry.5 crores farmers are engaged in sugarcane cultivation in India. India is the largest consumer of sugar in the world. Sugar industry covers around 7.5% of total rural population and provides employment to 50 million rural people. private. Sugar Industry in India is well developed with a consumer base of more than billions of people.

Literature Review .

To explain the impact of the crisis on the industry one has to consider several other factors. Over the year these two factors have actively contributed to the price changes but later on an additional factor has taken shape due to globalization. .e. Still. The main factors that affect the price of sugar commodities are the demand for sugar and supply of sugarcane. cost of processing or production. the slowdown had its own share of contribution to the dire conditions faced by the sugar industry at present.The impact of the Global Economic Crisis on the sugar industry is not as direct as its effects on other industries. i.

Sugar-price cycle also includes the returns from sugar trade Sugarwhich in turn accommodates the processing or production costs of borne by the sugar industry. sugarThis cycle explains how variation in sugarcane availability affects the production of sugar as well as the global sugar prices. .Due to the factors mentioned in previous slide. which in turn affects future sugarcane cultivation. the prices of sugar have been following a sugar-price cycle .

Inconsistent rains.5 million Mt in inventories compared to previous years. Exports. Fluctuations in sugarcane production due to inadequate irrigation facilities. we are short by 4.e. lower sugarcane yield. and frequent droughts in tropical and sub-tropical areas sub- .Cause Effect: Major reasons have caused this effect Growing demand in Brazil for diversification into Ethanol production Fall in production output from India i.

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Research Methodology .

Secondary Data Data- .Technical Analysis Data.Type of Research Fundamental Analysis .

Effects of external factors on sugar prices H0: There is a significant effect of external factors on sugar prices H1: There is no significant effect of external factors on sugar prices .

Data Analysis .

Data Analysis .

thus creating a balance in the global sugar scenario. leave alone the profit margin. Consumption is also expected to increase in the global sugar market. . which are not even sufficient to cover the prevailing international prices. Global Scenario The global sugar Market is also experiencing a scenario of sugar deficit. The sugar production is expected to bounce back this season due to the increased capacities in Brazil and India.Indian Industry Scenario India is the largest producer and consumer of sugar in the world. as production has failed to meet the consumption for two consecutive years. neither of them were able to benefit from increased production on account of high operative costs. Despite record production by the agriculturists and industrialists.

With the governments intention of increasing the blending proportion from 5% to 10% the potential is huge. The ethanol blending programme has been successfully implemented in 9 states and it will soon be implemented throughout the nation. .Ethanol To Provide Additional Revenue The ethanol blending programme has opened up additional revenue stream for the sugar industry. This would further strengthen the position of the sugar industries in the country and make them a viable investment option.

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Stock to use ratio 55% . Average current ratio for the years 2008-09 has been 0. Average debt equity ratio has been 2. Average return on capital employed is 10.3 % 5.8 times 20083. Current assets in sugar industry comprises of 60-70% of the total 60assets 2. Average creditors days is 114 days 7. Average debtors days is 15.Some financial details of the sugar industry 1.5 times 4.8 days 6.

Conclusion .

Hypothesis 1 -.Accept Null hypothesis There is a significant effect of external factors on sugar prices Hypothesis 2 -.Reject Alternate There is a significant effect of external factors on sugar prices .

This development has witnessed a smart rally in sugar prices that have come back to the levels that were prevailing in 2006. After successive years of surplus production and uninhibited capacity addition. While it may be still premature to comment on the production estimates for 2010-11. . the sugar output in India has started declining. it is evident that 2010production will not exceed consumption as area under sugarcane plantation has fallen significantly. There is still uncertainty about the sugarcane prices as the matter is under litigation and will have a significant impact on the profitability of the industry.The sugar industry seems to be finally coming out of the worst ever recession that it had seen over the past few decades. prices of byproducts such as molasses and bagasse have also started strengthening. Furthermore. with the fall in sugarcane production.

indiatimes.business-standard.com/news/sugar-seminar-to-focus-onsustainablesustainable-growth/649450/ http://www.com/india/news/sugar-output-may-rise-28http://www.business.mapsofindia.indiatimes.indiatimes.sugarindustry.com/sugarwww.mapsofindia.com/markets/commodities/India-toexport-sugar-in-2010/11export-sugar-in-2010/11Govt/articleshow/5929752.com/ www.com/india/news/sugar-output-may-rise-28to-24-mn-tonnes-in-2010-11/109713/on to-24-mn-tonnes-in-2010http://economictimes.financialexpress.cms www.com/news/sugar-seminar-to-focus-onhttp://www.com/markets/commodities/India-tohttp://economictimes.References http://economictimes.cms .business-standard.indiatimes.cms Govt/articleshow/5929752.com/markets/commodities/Govt-mullshttp://economictimes.com/sugar-industry/ http://www.com/markets/commodities/Govt-mullscuts-in-sugar-mills-contribution-towardscuts-in-sugar-mills-contribution-towards-PDS/articleshow/6593812.financialexpress.business.

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