‘India to ease sugar stock limit for big buyers’

‘India to ease sugar stock limit for big buyers’

New Delhi: India, the world’s top sugar consumer, could decide before August to allow large consumers to keep bigger stocks of the sweetener as prices keep dropping and supplies are likely to rise, officials said on Friday.

Hit by poor domestic supplies, India in February had barred large consumers like soft drink and confectionary makers from holding sugar stocks needed beyond 10 days — a move that had helped retail consumers in the tightly supplied market.

In May, the limit was relaxed to 15 days as local supply scenario improved and global prices eased.

“The limit will be relaxed," said a food ministry official, who did not want to be identified.

Another official said the ministry would review the rules on stock limits before August, when the current restrictions are set to lapse.

Improved production outlook in Brazil and India, the world’s two top producers, has halved the price of New York raw sugar futures that had hit a 29-year peak of 30.4 cents a pound in February.

Raw sugar futures closed 0.05% up at 13.99 cents a lb on Thursday as dealers saw prices moving in a range for the near term, with any stronger gains capped by big crop expectations in Brazil and India.

Last year, India had allowed overseas purchase of white and raw sugar to calm local prices as supply fell by 44% to 14.7 million tonnes last year due to the worst monsoon in nearly four decades.

The government had also asked millers to sell sugar in the open market on a weekly basis, instead of on a fortnightly basis.

However, output prospects improved for the current marketing year that began in October 2009 to 18.5 million tonnes, as heavy late monsoon rains over northwest India, the main cane producing belt, improved sugar recovery.

India’s sugar output in 2010-11 is likely to rise to 24-25 million tonnes, agriculture minister Sharad Pawar said, indicating a likely halt in imports as output would exceed demand for the first time in three years.

With the supply situation improving and prices falling, the government is likely to review the measures taken last year to ensure domestic supplies.

Also, a panel of ministers headed by finance minister Pranab Mukherjee is scheduled to meet on 10 June to consider a tax on white sugar imports as millers fear a flood of cheap imports, a food ministry official told Reuters on Thursday.