Singapore: India, the world’s largest sugar consumer, has struck deals to buy up to 150,000 tonnes of South American raw sugar for prompt delivery, defying multi-year high futures prices, dealers said on Thursday.
India’s appetite for sugar imports after the poor domestic harvest has fuelled a surge in raw sugar futures prices by over 80% this year, and with the festive season starting India’s sugar needs typically spike at this time of year.
The majority of the sweetener would come from top producer Brazil, which offered raw sugar at 120 points under New York’s front month contract. October raws rose 1.05 cents to end at 22.97 cents per lb on Wednesday, a 28-year high settlement.
The deals were done on Monday but details only emerged later this week, dealers said.
“We’ve heard three to four cargoes were done to India through various trade houses on Monday,” said a dealer in Singapore, who was familiar with the deals.
“You could say the amount is between 100,000 and 150,000 tonnes. The majority will be coming from Brazil,” he added.
Another dealer said the cargo are likely to include around 20,000 tonnes of raw sugar from Argentina.
Traders forecast a 45% drop in India’s sugar output to 14.7 million tonnes in the current crop year to September, versus consumption of around 23 million tonnes, which has led the government to extend its scheme to allow duty-free raw sugar imports until March and white sugar imports up to November.
Analysts see a poor monsoon triggering high Indian imports next year as well.
India’s sugar output in the 2009-2010 crop year is expected to reach 17 million tonnes, lower than the previously estimated 17.5-18.5 million tonnes, a senior industry official said last week.