London/Cairo: White sugar futures extended a two-day decline in London after India said it may introduce export incentives, adding to oversupply on the world market.
India, the world’s second-biggest producer, said on 26 March it was planning to build a two-million-tonne (mt) buffer stock and provide incentives to exporters once the country’s Election Commission had signed off on the proposal.
It may harvest a record 25mt this year, according to the Indian Sugar Mills Association, boosting the first global surplus in four years.
Brazil is the world’s largest producer of sugar.
“The Indians can sell sugar that is $33 (Rs1,419) cheaper,” said David Sadler, head of sugar trading at Sucden (UK) Ltd. “Plus there’s the fact that you’ve got a huge crop issue, with some 7-8mt surplus. There’s nothing bullish about this market.”
“The Indian government’s announcement that they will provide freight subsidies for exports and they will increase the export quota was immediately perceived as bearish in the market,” Jeff Bauml, managing director of BNP Paribas Commodity Futures Inc. of New York, said on Monday.
Raw sugar in New York fell 0.01 cent, or 0.1%, to 9.99 cents a pound at 7:10am on the New York Board of Trade.
Sugar in London may be “lower today because of the falling New York market,” said Sudakshina Unnikrishnan, an analyst with Barclays Capital in London. “Definitely that would be having some sort of an impact, even if it is just on the level of sentiment.”