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Sugar import to continue; caution on thin stocks

Sugar import to continue; caution on thin stocks
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First Published: Tue, Sep 01 2009. 05 07 PM IST
Updated: Tue, Sep 01 2009. 05 07 PM IST
New Delhi: India extended its buying spree on international sugar markets, traders said on Tuesday, while officials warned again of ultra-low national stocks to buffer the sort of supply shortfalls seen this season.
Buying by the world’s largest consumer of the sweetener has helped drive London futures prices to 28-1/2 year highs.
Agriculture minister Sharad Pawar said sugar yields from India’s cane crop may fall because of failed monsoon rains.
“We will be starting the next sugar season from 1 October, with a much smaller opening balance in comparison to the previous year,” he told a conference.
Pawar did not give a number, and it was not clear if he meant opening stocks would be lower than the 3.5-4 million tonnes the government forecast at the start of July, a substantially higher figure than industry expects.
Last week, the head of the National Federation of Cooperative Sugar Factories Ltd, J.B. Patel, said India’s opening stocks would be 2.7 million tonnes, down from 10 million a year ago, while a leading newspaper reported last week that stocks had already fallen to 4.5 million tonnes.
India’s weakest monsoon in nearly four decades has hit crops from sugar to oilseeds, leading the government to relax import restrictions on sugar, encouraging a surge in imports and global sugar prices.
On Tuesday October raw sugar futures on ICE rose 0.29 cent to a peak of 24.68 cents a lb by 1:10pm, the highest level for the front month since February 1981.
Low stocks, barely enough to meet a little over a month’s consumption, and concerns that lower crop area and diminished sugar recovery will hit next year’s output have encouraged Indian firms to step up import deals for both raw and refined sugar.
“In the last three weeks, India has probably bought about 1 million tonnes of raws. India has already bought, as we heard, probably four million tonnes out of the six-million-tonne needs,” Jonathan Kingsman, head of the Kingsman brokerage, told Reuters.
Kingsman had said in an interview on Monday India was estimated to have bought 900,000 tonnes of raw sugar from Brazil over the past three weeks but the latest rally in New York had blunted its appetite.
Thai sugar
Traders said India had bought up to 60,000 tonnes of Thai white sugar, with total purchases of up to 100,000 tonnes expected by October.
Thai firms are selling the Thai white sugar at discounts of $5 to $10 per tonne under London’s October contract with freight rates ranging from $20 to $30 per tonne for shipment from Thailand to India, traders meeting in the Indian capital said.
London white sugar futures soared to a record high on Tuesday, tracking gains in ICE raws. October whites set a record peak for the front month of $602.40 per tonne.
“Our Thai sugar is going to be cheap to India,” one trader with a Thai firm told Reuters. “If you ask millers they will tell you they have already sold out, but the sugar is in traders’ hands and stored in warehouses.”
Some Indian firms revealed their recent deals to import raw sugar.
Balrampur Chini Mills Ltd said it had contracted imports of 100,000-125,000 tonnes of raw sugar, which were expected to land on Indian shores this month.
On Monday, Simbhaoli Sugars said the company had imported 163,000 tonnes of raws this season.
Worries of rising prices and shrinking demand have mounted in recent weeks as monsoon rainfall remained weak in the key crop areas.
“The country is passing through a difficult situation due to insufficient monsoon. This has not only affected sowing of important crops like paddy but may also adversely impact sugar recovery,” Pawar said.
Shree Renuka Sugars chief executive Narendra Murkumbi said 30% of India’s annual demand of 23 million tonnes, would be met from imports.
That amounts to nearly 7 million tonnes, but industry officials say this includes about 3 million tonnes of raws purchased this year that would be processed and consumed next year.
India’s sugar demand peaks around September and October when a series of Hindu festivals sharply raises the demand for the sweetener.
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First Published: Tue, Sep 01 2009. 05 07 PM IST
More Topics: India | Sugar | Sharad Pawar | Monsoons | Import |