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Raw sugar may extend losses on global surplus

Raw sugar may extend losses on global surplus
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First Published: Sat, Mar 10 2007. 12 13 AM IST
Updated: Sat, Mar 10 2007. 12 13 AM IST
New Delhi: Raw sugar prices, which have slumped 35% in the past year, may decline further as Brazil and India, the world’s biggest producers, harvest a record crop.
Prices on the New York Board of Trade may drop to as low as 10 cents a pound by June, said Vempati Karthik, an analyst with TransGraph Consulting. Raw sugar, which touched 19.3 cents in February last year, closed at 10.59 cents on 8 March.
Brazil may harvest a record 490 million tonnes of sugar cane, up from 458 million tonnes last year, the government said.
India’s cane production may reach 315.5 million tonnes, 12% more from a year ago, while output of white sugar may rise to 24 million tonnes, according to the agriculture ministry.
“We are expecting more supplies in Brazil starting May, and in India we expect a surplus of four million tonnes” available for exports, Karthik, who has been predicting prices for the last two years, said.
Karthik’s not alone in predicting sugar may decline. Plinio Nastari, who runs Datagro, a sugar industry research company in Sao Paulo, said on 8 March prices in New York will fall to as low as 9.5 cents a pound over the next two to three months.
Prices may rebound later this year on rising ethanol demand from Brazil’s flexible-fuel cars, which can run on the biofuel, petrol or any blend of the two, he said. Sugar may rise to as high as 12 cents a pound by year-end, he said.
Global sugar supply will exceed demand by 7.2 million tonnes, the International Sugar Organization has said. At the same time, Russia, the world’s biggest buyer, may raise its import duty on raw sugar amid an increase in production, Karthik said. Russia’s production has more than doubled over the past six seasons and is expected to reach 3.5 million tonnes, ISO said 16 February. The duty has stayed at $140 a tonne since October 2005 after being at $164 between January 2005 and September 2005.
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First Published: Sat, Mar 10 2007. 12 13 AM IST
More Topics: Money Matters | Commodities |