DAILY NEWS LETTER 1st Dec. 2011 Tel : 020-26899931/32/33 Fax:020-26898047/48 /49 Mail: kamaljaintrading@rediffmail.com kamaljaintrading@yahoo.

com

Kamal Jain Trading Services Pvt. Ltd. Sugar House, Bungalow No. 4, Acacia- III, Magarpatta city, Pune-411028, India

Dear Sir, We are sending Sugar Update as a complimentary copy. Requesting all our valued readers to kindly subscribe to Sugar Update so as to get regular copy from us. For annual subscription, please send multicity cheque or DD of Rs5515/- in favour of Sugar Update payable at Pune. Kindly ignore if already subscribed. If you do not wish to receive it further, please inform us to remove your name from recipients list.

Earth provides enough to satisfy everymans need, but not every mans greed

Domestic Market
NCDEX Sugar M Future quotes Kolhapur
NCDEX Sugar M Future Quotes Kolhapur
Expiry Date 20/12/11 20/01/12 20/02/12 Best Buy 2989 2954 2955 Best Sell 2993 2948 2967 LTP % change -0.37 -0.37 -0.44 High Low Open Interest 48850 18220 4310

Market Commentary
The market traded high due to selling pressure overnight, bad weather conditions and perhaps a shift in the Brazilian ethanol policy. Also the rally in the energy markets seemed to help support the sugar market. But in general news seems to be supportive to bears as Northern hemisphere crops contribute to the large expected statistical surplus year. Thailand sugars are beginning to move on the world market. India has excess sugar for export Traders see a recovery in production from Brazil next year. China buyers emerged in the physical market this week but most traders believe they have yet to book sugar. Some say China have targeted prices below the current world price and that they may be patient buyers in early next year. China production this season is thought to be up about 15% to 12mln tons. Raw sugar futures were stronger again after a steep six week downward trend. The inability of the MAR 12 contract to hold under 23/lb and a strengthening in asset markets generally saw futures rally almost 3% during the session. Date International prices(FOB Basis) White Raw Sugar($/MT) Sugar(c/lb) 01/12/2011 613.60 23.71

2991 2945 2958

2999 2958 2965

2985 2940 2956

NCDEX Future Prices December 2011

Date Prev Close Price Open Price High Price Low Price Close Price Volume Open Interest Traded Value (Rs.in Lakhs) Delivery Centre

30-NOV-2011 3029 3012 3018 2985 3002.00 13910 48210 4172.83 Kolhapur

On 30th November sugar futures fell in India as crushing of cane from the producing areas are increasing amid sluggish demand in the domestic markets. Sugar exports notification for 1 mln tons is likely to be issued soon and the full quantity will be in a single tranche to control prices from falling sharply. On 30th November Sugar M futures ended weaker. The Food Ministry has decided to make available 19.07 lakh tons of sugar in December, 17 lakh tons for non-levy sugar and the remaining 2.07 lakh tons for levy sugar. The average December demand is seen around 1.65 -1.70 mln ton. So the quota allotted will be more than comfortable which could keep a check on prices. For the sale of the entire non-levy sugar quantity the Government has given time till December 31st.

Kamal Jain Trading Services Pvt Ltd

Sugar Update

As on 01/12/11 in Rs/quintal

Co-operatives sugar factories on the way to progress 3148.00 2992.00 3250.00 The first private sugar factory started in 1904 in Kolkata. After which many private factories were started all over the country. Even in countries like Brazil, America, Fiji and countries around Fiji started private factories. In the year 1960 Padamshiri Vikhe Patil also worked hard to start the first co-operative factory in Maharashtra at Pravaranagar. At the same time there were not many private sugar factories and many co-operative sugar factories were started in the country. In approx. 40Km distance cultivated land (garden land) co-operative factories had started. In the year 1960 the per hectare production was 67 tons. In 1982 the per hectare production was 98 tons. The acerage in 1960 was 1.5 lakh hectares. In 1982 it was 3 lakh hectares. In 1992 it was 4 lakh hectares, but the avg. production per hectare reduced to 76 ton. In 1995 acreage was 5 lakh hectares and per hectare average was 85 ton, because of which sugar factories survived in Maharashtra. Now it is the time of private factories, because the cane production has increased. Currently the acerage is 8 lakh, even the replanting of cane/ratoons is been managed properly, because which per hectare produce has increased. The need of the future is drip irrigation and use of liquid based fertilizers. By improving the fertility of the land the farmers can save fertilizer costs and manufacturing cost will also reduce. Like this the co-operatives. will progress. (Source: AgroOne 01/12/2011)

Regions
Delhi Kolhapur Kolkatta Muzfr.Ngr

Sugar M
3275.00 3087.35 3350.00 3341.90

Regions Sugar S
Erode Kolhapur Kolkatta

Local Market
On 30 November prices for sugar S went down by Rs. 10-15/quintal, Sugar M was unchanged on hopes that free sale quota of December be announced. Naka rates dropped sharply by Rs. 2030. Tender rates weakened on absence of new tenders by mills. Demand may be high by 3rd week of December due to Christmas.
th

National news
Delay in issuing the official notification allowing export of one mln ton of sugar may hit margins. The decision was made on November 22nd a week ago at the EGoM headed by the Finance Minister Pranab Mukherjee. Isma says If governments intention of giving some relief to sugar mills from exports is to be realised, the notification should not be delayed any further. With a declining trend in global sugar prices, Indian exporters may soon lose the present export margin of abour Rs. 1 1.50 /kg. According to Czarnikow Group Ltd sugar exports from India may fall in the current season from the previous period, and exports are unlikely to reach market expectations of 4 million tons. Simbhaoli Sugars Ltd has informed BSE that The Allotment Committee of the Board of Directors of the Company at its meeting held on November 30, 2011, has issued and allotted 8,70,000 equity shares.

International News
According to Jim Paice global demand for sugar was growing at two per cent a year and had now reached 165mln tons a year. Global sugar refining capacity will rise by 3.8mln tons by 2013 from about 14.5mln tons i.e. to 18.3mln tons and the white sugar will face no difficulties in finding buyers. Sugar refiners will expand capacity by more than 25% by 2013 with global production set to exceed demand and the demand may grew by 2.4% to 2.5% this year, according to Abhishek Nanda, trading manager at Dubais Al Khaleej Sugar Co., the worlds biggest sugar refiner. Bunge: Global sugar demand will be driven by Asia According to Bunge Ltd global sugar demand will be driven by Asia partly on population growth, according to Bunge Ltd. Mr. Rob Coviello said that the per capita consumption of sugar in China is 11 kilograms (24 pounds) and in India 21 kilograms. If sugar consumption in China rose to match Indias, it would take about 50 percent of Brazils exports, he said. Brazil is the worlds largest sugar
2 Sugar Update

State at a Glance
Maharashtra Need to increase the export quota From the previous seasons manufactured sugar 45% of it is still lying in the go downs of the factories. Now when the crushing season 2011-12 has started in full swing, the issue will be where the factories will keep the new sugar. So the central govt. should increase the export quota. The interest on the stored sugar is also increasing which is adding burden on the factories. The sugar factories have got the export quota of 35 to 45 thousand quintals. So now there will be 45% from the previous seasons and 10 to 15% sugar of sugar manufactured for the current season till date. So if the export quota is increased then co-operatives will pay the farmers good cane price.

Kamal Jain Trading Services Pvt Ltd

exporter and India is the biggest consumer and second-largest producer. Brazil, Thailand and Australia will keep driving global sugar output, he said, adding that Brazil faces challenges to meet demand because both sugar and ethanol are made from sugar cane in the country. The South American country has become a net importer of ethanol, particularly from the U.S., as cane output fell, he said. It may have to import the biofuel in the next four to five years, especially in the period between crops, he said. Sugar cane output in Brazil will drop for the first time in 10 years to 488.5 million metric tons, according to the Brazilian industry group Unica.

Total quantity offered by 27 responsive bidders came to 175,000 MT. TCP Chairman said that the sugar price in the market is presently on declining trend whereas the price of imported sugar was about at Rs 91 per kg during the middle of November 2011. He also informed the committee that in view of declining trend of the price of local sugar in the market, PSMA had voluntarily offered to reduce the quoted lowest sale price from Rs 65,000 PMT to Rs 63,000 PMT.

Russia
Raw Sugar Import Duty to extend till August The customs union of Russia, Belarus and Kazakhstan may extend a restrictive duty on raw sugar imports by three months due to a record harvest of sugar beets. Sugar producers asked customs to extend the seasonal duty of $140 a metric ton to Aug. 1 instead of decreasing it to $50 a ton on May 1.

Brazil
Morgan Stanley: 2012/13 sugar production to increase by 5% According to Morgan Stanley in the next crop year if weather conditions are favourable Brazil's centre-south sugar production will likely grow by 5% to 32.4mln tons. "We expect the 2012/13 centre-south cane crush, which starts in April 2012, to reach only 528 million metric tonnes, up 24.7 million tonnes on year but still down from the peak of 542 million tonnes seen in 2009/10," it said in a research note. Aging cane will continue to drag on agricultural yields, requiring greater replanting efforts in the coming year, it said.

Miscellaneous
United Kingdom
Paice:Abolishing of EU quotas will benefit UK Abolishing EU sugar production quotas would increase production. Stop shortages and bring down artificially high prices. According to Farming minister Mr. Jim Paice liberalising the EU's protectionist' sugar regime would bring huge benefits for Britain's economy'. He said at ISO conference that the world's population is to reach 9 billion in coming decades and Britain's sugar-beet industry must be allowed to take advantage of the opportunities to export foods to emerging markets. The NFU recently described the UK Government's backing for European Commission proposals to end EU sugar quotas by 2015, under current CAP reform plans, as ridiculous'. Paice said that the UK welcomed the proposal because current quotas, and tariffs on imports of cane sugar, are exacerbating shortages, artificially inflating prices, and preventing the sugar industry from taking advantage of the soaring global demand'. There have been significant shortages of sugar across Europe over the past year which was make worse by the EU's strict sugar regime, which limit imports of cane sugar to certain developing countries and prevent European farmers from growing more sugar-beet. He said this has pushed up prices for manufacturers and consumers to very high levels', particularly affecting Britain's food and drink industry, the country's biggest manufacturing sector. But Paice stressed that quota must only be scrapped if equal measures' cane sugar imports are also
3 Sugar Update

Thailand
920,000tons of cane crushed According to the Office of the Cane and Sugar Board 20 mills had started crushing Thailand's 2011/12 (Nov/Oct) crop as of November 27. About 920,000tonnes of cane have been crushed into 43,700tonnes of raw sugar and 327tonnes of whites, industry sources said.

Pakistan
TCP-PSMA sugar deal to approve The Economic Co-ordination Committee (ECC) of the Cabinet is all set to approve the deal between the Trading Corporation of Pakistan (TCP) and Pakistan Sugar Mills Association (PSMA) for procurement of 185,000 tons sugar at Rs 63 per kg. 32 bidders/sugar mills had participated in the tender and 27 bids were declared as responsive. Out of them, six mills quoted the lowest rate of Rs 65,000 per metric ton for total quantity of 48,000 tons, and two mills quoted 2nd lowest rate of Rs 65,100 PMT for total quantity of 15,000 MT. Two mills had quoted the 3rd lowest rate of Rs 65,200 PMT for total quantity of 20,000 MT.
Kamal Jain Trading Services Pvt Ltd

introduced, so that British refiners like Tate and Lyle can compete on an equal footing. He said the problems with last year's UK beet harvest, caused by the severe cold weather, showed Britain's food security would be better protected by having access to two sources of sugar supply to better guard against climatic or plant disease impacts'.

Malaysia
Sugar consumption exceed Sugar consumption among Malaysians at a high rate with an average of 51grams daily a cause for concern.

Investment
Brazil
Within 10 years power production from bagasse will double In the next 10 years Brazil is expected to double power production from bagasse. The government energy research company Epe said that the current cogeneration capacity from sugarcane biomass of 4.5GW would more than double to 9.2GW by the end of this decade. Sugarcane mills generate most of their revenues from ethanol and sugarcane production, but biomass cogeneration adds a new income stream, while companies will also be eligible for carbon credits. Brazilian power company CPFL is investing in biomass cogeneration. It announced a 400MW sugarcane bagasse plant as part of a 1.5GW clean energy complex that will be built over the next two years. Wind farms and small hydroelectric plants of less than 30MW will make up the rest of the project. CPFL has started three cogeneration plants using bagasse - Bio Baldin (45MW), Bio Formosa (40MW) and Bio Buriti (50MW). Its Bio Ipe (25MW) cogeneration plant is due to start up by the end of this year. The 70MW Pedra plant is expected to start up in 2012, with two 50MW facilities, Coopcana and Alvorada, following in 2013. Brazil is the world's largest sugarcane producer, but biomass cogeneration is relatively underdeveloped. All new sugar and ethanol projects built in the country have cogeneration plants, which provide as much as 30pc of a mill's revenue. But the number of new mills is small compared with Brazil's roughly 440 older facilities. These older mills have cogeneration plants that are usually inefficient and do not produce surplus power that can be sold to consumers elsewhere. Sugarcane mills could generate as much as 13.2GW in 10 years, as much as the Itaipu hydroelectric plant, Brazilian sugarcane industry association Unica said. Power production from bagasse has the added advantage of peaking during the main cane harvest months of April to November, when hydroelectric output declines, the association said.

Cuba
20% more sugar production expected As the cane cutting began in Eastern Guantanamo province on Nov 29th the Cubas 2011-12 sugar harvest started. More cane will be used to increase 20% raw sugar production. The first two of 46 mills are scheduled to open this week, with plans calling for output to reach 1.45 million metric tonnes by the time the season ends in April, up from the estimated 1.2 million tonnes during the previous harvest.

UAE
Al Khaleej Sugar, the world's largest standalone refiner, shut down its operations April 8 due to a lag in demand, but started up production at a capacity of 6,000 tonnes a day as of April 23 after completing an expansion program. Al Khaleej said that demand for white sugar has been increasing from countries outside of Middle East markets, as a pullback in prices from the 30year highs reached in February has encouraged buying.

Fiji
Tate and Lyle and Lyle has committed to work with the Fiji Sugar Corporation Tate and Lyle has committed to working with the Fiji Sugar Corporation to draft a new technical support program for the 2012 crop year following a meeting between key senior executives and Fijian Prime Minister Commodore Voreqe Bainimarama in London this week. A delegation from the American Sugar Refiners will arrive in Fiji later this week to finalize the 2012 program. Bainimarama was also briefed on the company's operations with the Fiji Sugar Corporation in 2011 which resulted in reduced sugar lost in mills operations, increased operating efficiency, hands on training, the production of 4,300tonnes more of sugar and support in the agricultural, harvest and transport sectors. Tate & Lyle Sugars' 2011 Technical Support Program has largely focused on increasing mill production levels. In partnership with the Fiji Sugar Corporation (FSC), Tate & Lyle Sugars acknowledged Government's success in the commissioned 2010 Deloitte Report.

Ireland
Revival of sugar-beet industry will lead to 5000jobs According to a feasibility study by the Irish Sugar Beet Bio-Refinery Group about 5,000 jobs

Kamal Jain Trading Services Pvt Ltd

Sugar Update

could be created by the revival of the sugar beet industry. The PWC-backed study is calling for the establishment of a bio-refinery plant in the southeast, which would produce sugar as well as ethanol from beet and grain. This plant would be privately owned and the estimated cost for construction is about 350 million. 30% of the finance would come from equity investment and the remaining 70% from 15-year bank loans. The plant would be profitable within the first year, according to the study. Under the proposal by the Irish Sugar Beet BioRefinery Group, the bio-ethanol plant would process 1.2mln tons of sugar beet, one million of which would be used to produce 154,000tonnes of sugar and the remainder is used to produce ethanol. The study states that growers would be paid E40/tonne for sugar-beet at 16.5% sugar content, delivered to the plant. This is based on an ex-factory sugar price of EUR570/tonne which, based on current inflated sugar prices of over EUR800/tonne, the study states is a conservative figure. According to Chris Comerford, former chief executive of Irish Sugar and Greencore and a member of the expert group, said the establishment of a joint sugar/ethanol plant is critical to the financial viability of the project. He said the proposed annual output of 154,000 tonnes of sugar is equivalent to the annual sugar demand in Ireland. "Developing an industry that would rely on exports would not make economic sense," he said. "Because Ireland surrendered its sugar quota in 2006, a new Irish sugar plant will require EU approval. The proposal to abolish the EU sugar quota regime in 2015 opens a real opportunity to re-establish sugarbeet processing in Ireland. Planning for the new industry needs to begin immediately," he said.

wider market if crude oil prices rise above US$150 a barrel.

Mergers & Acquisitions

Australia
The success of competing takeover offers by Australian sugar companies Sucrogen and Tully Sugar Ltd. for troubled Proserpine Cooperative Sugar Milling Association Ltd. could be finalized at a meeting and vote on the offers by its creditors, scheduled for Dec. 9. Tully, a unit of Chinese state-owned Cofco Group, has a A$128 million (US$128.7 million) cash offer for Proserpine, which includes a distribution of more than A$44 million to grower-members after estimated costs are deducted, King said in a statement issued Wednesday.

Ethanol
Pacific Ethanol Inc. has regained its foothold on the Nasdaq stock market. The Sacramento ethanol maker was warned by the Securities and Exchange Commission in September of possible delisting due to its sagging stock price. The warning was issued because PEI stock had closed below $1 a share for 30 straight trading days. Rex American Resources Corp.'s (REX) fiscal third-quarter profit jumped 53% as the ethanol producer reported sharply higher average prices for distiller grains and ethanol, driving u For the quarter ended Oct. 31, Rex American reported a profit of $6.5 million, or 70 cents a share, up from $4.3 million, or 44 cents a share, a year earlier. Earnings from continuing operations rose to 65 cents from 38 cents. Revenue increased 20% to $84.5 million. Gross margin widened to 10.6% from 9.9%.p sales and margins.

America
Ethanol output up 1.4 percent, most in nearly a year. U.S. ethanol production rose 1.4 percent last week to the highest in nearly a year, while stocks fell more than 2 percent, the Energy Information Administration reported on Wednesday. U.S. ethanol production totaled 930,000 barrels per day in the seven days to November 25, up 13,000 bpd from the previous week. Output was last that strong when it hit 937,000 bpd for the week ended December 10, 2010.

Jamaica
Pan Caribbean Sugar plans to build a US$150 million According to Jamaica's Observer newspaper Pan Caribbean Sugar plans to build a US$150 million state-of-the-art sugar factory at its Monymusk estate in Clarendon to open in 2015. According to the Chinese-owned company the new plant will be able to process up to 1mln tons of cane per year, up from 350,000tonnes at present. The company hopes to increase its acreage at Monymusk i.e. from 3,000 hectares to 8,000 hectares. "Now we're just making raw sugar, but in the future we'll be looking at bagging sugar and packing sugar," said Hanqi He, the company's chief executive officer. A co-generation plant will turn bagasse into 50MW of electricity, mostly for on-site use. However, it could also produce ethanol for the
Kamal Jain Trading Services Pvt Ltd 5

Thailand
Regular petrol to be phased out Pure petrol will be phased out by October next year in order to stimulate demand of locally produced ethanol, says the Energy Minister, Pichai Naripthaphan. Mr Pichai said the plan would double ethanol use to 2 million litres per day. The country's total current capacity is estimated at 3
Sugar Update

million litres. The move will enhance the capacity utilisation of ethanol producers, who are now suffering from oversupply, he said after the meeting of the National Energy Policy Council (NEPC). The NEPC approved a 10-billion-baht aid package yesterday for flood victims in the business sector.

mandate required that 36 billion gallons of renewable fuel be produced by 2022. The higher demand for corn has increased corn prices and thereby negatively affected the livestock sector. The Purdue research team has begun a study that may produce great returns. The poplar species is a multiyear crop that can be harvested at any time in the year and sent directly to ethanol plants. With the ability to grow rapidly and be harvested multiple times in the year, the poplar may prove valuable. Disclaimer: Our views expressed are independent. However by coincidence if resemblance to anybody anywhere in past, present &future we are no where responsible & will not entertain/respond to claims or queries raised we have no intention to hurt anybody and our due apologies given in advance.

Investments
Company expands ethanol plant ownership outside Iowa A Kansas-based company that owns four Iowa ethanol plants is buying a biodiesel plant in southeast Nebraska. Flint Hills Resources is purchasing the plant in Beatrice for $5-million. It cost $52-million to build the plant in 2007 but Beatrice Biodiesel filed for bankruptcy in 2008 and the plant never opened. Beatrice city attorney Tobias Tempelmeyer says hes encouraged by the sale.The initial plan was to use soybean oil to create diesel fuel and a byproduct, glycerine. Reports say the new company will make use of another product to make biodiesel.

Innovations
America Town may treat water from spill at ethanol plant In a meeting for the Cloverdale Utility Board on Tuesday, the main item that concerned the town was the potential discharge into the Cloverdale sewer system from POET bio-refinery. POET, which produces ethanol from corn, recently had an incident where nearly 1.5 million gallons of corn mash was released into its storm water pond. The company then drained the pond into a wastewater tank and is now looking for ways to get rid of it. The Cloverdale Wastewater Treatment Plant is designed to handle 700,000 gallons a day. The amount of corn mash that is expected to go into the city's sewer lines is also more than the Biological Oxygen Demand (BOD) the town typically handles. BOD is the amount of dissolved oxygen needed by aerobic biological organisms in a body of water to break down any organic material that is present. It is estimated that 40 gallons per minute will be drained for a period of eight hours a day. In total, there will be around 19,200 gallons drained per day. It is estimated to take around 78 days to drain the tank. Purdue professor leads new research alternative biofuel sources - Purdue in

Research on the poplar as an alternative to corn for ethanol production is being conducted at This allows the usage of older poplar plants to produce new plants more quickly.The corn crop is used significantly for ethanol production, and the government mandate for renewable fuels usage and consumption has further increased its usage. The
Kamal Jain Trading Services Pvt Ltd 6 Sugar Update