New Delhi: India’s sugar demand dried up after New York raw futures spiked to another 28-1/2-year high on speculative buying, dealers attending a sugar conference in the Indian capital said on Wednesday.

The October raw sugar contract trading on ICE Futures US eased 0.15 cent to finish at 24.24 cents per lb on Tuesday, after hitting 24.85 cents, the highest level for the front month since February 1981.

“India still needs to buy between a million and 2 million tonnes of sugar,” said Jonathan Kingsman, head of the Kingsman brokerage.

“But with prices so high and the market so volatile at the moment, and having already bought so much, I don’t see the urgency for India to buy just in the next couple of weeks,” he told Reuters.

Other dealers said India, the world’s largest sugar consumer, was absent from the market this week because of the high prices, although there were also rumours the country had bought one or two cargoes in the last two days.

“India is definitely not buying. The price is too high,” said a dealer at Thai producer, adding that the recent rallies in New York were driven by speculative buying by dealers who expect to sell sugar to India.

Indian demand fuelled by poor monsoon season and declines in domestic crops, combined with a slow harvest in top producer Brazil, has driven a rally in sugar this year, in which raw sugar futures more than doubled.

Industry officials say Indian mills have contracted 4 million tonnes of raws so far in the current season, and out of the imported quantity 1 million tonnes of raws will be processed before the current season ends in September, while the rest will be carried over to the next season.

“The fact that they have bought a lot means the higher price shouldn’t frighten them as much as it does. Because they’ve already got a lot of sugar on board, they have little bit of choice over timing,” said a dealer at a European brokerage.

“They don’t have to necessarily go and chase that price right now. The high prices just don’t frighten them because they’ve got cheaper prices already under their belt,” he said.

Improved monsoon rains in recent days will boost crop prospects for rice and sugar cane, India’s farm secretary, T Nanda Kumar, told reporters on the sidelines of the sugar conference.

He said other crops would also gain, although analysts say most of the damage to crops is irreversible.

India’s monsoon rains have been a quarter below average so far this year.