Home >> Stock Forums >> 10% ethanol blend law could be big boost to Indian sugar industry

10% ethanol blend law could be big boost to Indian sugar industry

AlfredSokol said: "Here's an interesting move that could be taking place in [url=http://www.livemint.com/2007/08/28235832/10-ethanol-blending-in-fuel-t.html]India[/url]. Since sugar is in a huge oversupply state, a new directive is being discussed. [quote] While blending—at 5%—is currently optional for individual states, the GoM has recommended that 10% blending of ethanol be made mandatory by October 2008, with only exceptions being Jammu and Kashmir, the north-eastern states, Andaman and Nicobar Islands, and Lakshadweep. The recommendation now goes to the cabinet committee on economic effairs (CCEA) for approval. An official close to the development, who spoke on the condition of anonymity because of the far-reaching implications of the group’s decision, said the GoM has also agreed to recommend a uniform purchase price of Rs21.50 per litre, ex-factory, for the supply of ethanol, to be implemented all over the country for the next three years.[/quote] The case of oversupply of sugar has been very intense in India, which is the world's second largest supplier of Sugar, behind Brazil. Growers have been starving for the better part of the year. Using the sugar and sugarcane for ethanol could kill two birds with one stone. [quote] India is the world’s second largest producer of sugar, behind Brazil, and the largest grower of sugar cane. Ethanol is produced from the fermentation of sugars such as corn, sugar cane, grains and beet. In India, ethanol is mostly made from rectified spirit which, in turn, comes from molasses—a by-product in sugar manufacturing. Molasses comprise around 45-50% of total sugar production[/quote] A rise in Ethanol consumption worldwide should have huge effects on commodities, especially sugar, corn, sugarcane, and beet. Becoming an expert in this subject could be commercially viable for any adepts students, IMHO."

Rickster said: "That would be fine with me. I have been sitting on some sugar futures for a looooong time."

AlfredSokol said: "[QUOTE=Rickster]That would be fine with me. I have been sitting on some sugar futures for a looooong time.[/QUOTE] Sounds like you became an unintentional investor! Don't futures expire?"

Rickster said: "Actually, my original intent was to hold for a long period. I bought the longest term future I could get. I recently rolled it forward. My strategy on futures is fairly simple. I buy them when they are near historically low levels and then hold until there is a large run up. I dont try to trade them, in the sense of speculating on which way they will go, because I don't have any edge in that arena. My strategy is based on experience in selling crops harvested on my farm and on reviews of very long term charts (40 or 50 years). Commodities tend to have historic minimum price levels that provide a floor and limit losses. Every so often they have huge price spikes due to temporary demand/supply imbalances. So, when a commodity gets near historic lows, I buy. I set my leverage so that even if it does retest the floor, I wont be wiped out. Leverage is usually in the range of 2 or 3 to 1. Then I wait. It can take years. I made a mistake and tried jumping on what looked to be a newly forming runup on sugar. I bought at 15 after it had pulled back and based from a breakout. It was up off the floor farther than I wanted. But the risk reward was still acceptable because spikes had run as high as $65 (in 1974 dollars). I was prepared to ride it as low as $5. It has tested my fortitude. Long term charts can be found here. [url]http://futuresbuzz.com/long_term_charts.html[/url] The sugar chart is here [url]http://www.futuresbuzz.com/sugarlt.html[/url]"

lil dickie said: "That spike in 1974 looks impressive! Perhaps ethanol could be the answer, at least if you hold long enough. If ethanol use becomes mandated in many countries the crop value should rise."

AlfredSokol said: "Yes very interesting chart. Those spikes could really put some coin in one's pocket."

MoeInvested said: "This is a funny mention! Just yesterday I noticed for the first time, a white sticker on a fuel pump at a local gas station in SC, [B]10% Ethanol[/B]. Maybe this is a sign (pun intended) :laugh: Regards!"

AlfredSokol said: "I think we'll be seeing more and more ethanol. It would also help all the corn-growing states of the MidWest. Could be a real boost for farms and co-operatives."