India’s sugar imports may be lower than ISO estimate

India’s sugar imports may be lower than ISO estimate

Mumbai: India’s 2009-10 sugar imports may touch 3-4 million tonnes because of a price disparity, lower than 5 million tonnes estimated by the International Sugar Organization (ISO), a senior industry official said on Monday.

“The big producing states like Maharashtra and UP (Uttar Pradesh) are not in mood to import any quantity. Prices are too high. I think 3-4 million tonnes is possible," Prakash Naiknavare, managing director of Maharashtra State Co-operative Sugar Factories Federation Ltd, said.

Landed cost of sugar was Rs31 ($0.648) per kg, while domestic prices were between Rs27 and Rs27.5 per kg, Bajaj Hindusthan Ltd joint managing director Kushagra Nayan Bajaj said in an interview on Friday.

Naiknavare said so far not a single mill from Maharashtra has contracted to import raws.

India is likely to import 2.8 to 5 million tonnes of sugar in 2009-10 as the cane crop contracted for a second straight year, a Reuters poll forecast on Wednesday.

“Earlier importers were hedging their risk in the futures market. They don’t have this option now. Government has suspended sugar futures," Yatin Wadhwana, managing director of Sucden India Pvt Ltd, said.

India’s commodities market regulator has barred the launch of new sugar futures contracts until the end of 2009, and has also forbidden traders from opening new positions in existing contracts.

In Kolhapur, a key market in top producer Maharashtra, the price of the most traded S-variety sugar has jumped 19 percent in eight sessions to Monday, but were still not high enough to make imports viable, traders said.

New York ICE front-month raw sugar futures surged more than 3% on Monday on trade and investor buying to 21.55 cents a lb, the highest level since March 1981, spurred by tight supplies, dealers said.

Tracking raw sugar, Liffe benchmark front-month white sugar futures hit an all-time high of $556.60 per tonne.

“Prices (domestic) will be firm. There is no reason for prices to come down. But they will not climb up as they had climbed in last couple of days," said Naiknavare.

India’s sugar output in 2009-10 is expected to reach 17 million tonnes, lower than the previously estimated 17.5-18.5 million tonnes, as erratic rains are likely to cut yields, a senior industry official said on Tuesday.