Wednesday, June 10, 2009
Wednesday, 10 June 2009
India, the world’s biggest sugar user, may have imported enough of the commodity this season to fill a gap in supplies, the nation’s biggest importer said. Mills have contracted to buy about 2.28 million metric tons, including 80,000 tons of white sugar, and that may be sufficient to meet demand until new crop is processed in October, Narendra Murkumbi, managing director of Shree Renuka Sugars Ltd., said in an interview by phone from Mumbai.
Reduced purchases by the South Asian nation may help cool a rally that’s made raw sugar the best-performing commodity in the UBS Bloomberg CMCI Index in the past year. Sugar has advanced 41 percent since January on forecasts for a global deficit, driven mainly by the drop in India’s production decline.
“Current prices are unattractive and only a few cargoes have been bought in the past four to five weeks,” said Murkumbi. “The local market is quite sluggish and that indicates there’s no supply shortage.”
Raw sugar for July delivery added 1.2 percent to 15.56 cents a pound in New York yesterday as a weak dollar raised the appeal of commodities as a hedge against inflation. Futures for October delivery, the most active contract, were at 16.63 cents a pound in after-hours trading at 3 p.m. in Mumbai.
India, also the world’s second-biggest producer, has become a net buyer for the first time in three years as output is set to decline 44 percent to 14.8 million tons this year. Production has fallen for two years from a record in 2006-07.
Global output will drop a record 20 million tons for the current season, according to Czarnikow Group Ltd. The deficit may narrow to 6 million tons in 2009-10 as output increases in India and Brazil, the brokerage said June 1.
India may import about 2 million tons in the year starting Oct. 1, Murkumbi said. That’s less than the 2.5 million tons he estimated last month.
“A lot of mills have frontloaded their purchases for next year’s requirement,” he said. “Sugar prices will be the key in determining how much India buys.”
Bajaj Hindusthan Ltd., India’s biggest mill, said yesterday it plans to import 100,000 tons of raw sugar for processing next year. The company has already contracted 91,000 tons. Balrampur Chini Mills Ltd., the second-biggest, plans to import 100,000 tons, Vivek Saraogi, managing director, said April 29.
India’s production may total 21 million tons next season, Murkumbi said, repeating a May 6 forecast.
“Mills may begin crushing early next season to boost supplies and cane diversion to jaggery will be prevented,” Murkumbi said. “A realistic picture on production will only emerge in October.”
Farmers in India’s biggest cane-growing regions received 13 percent higher prices this season from jaggery makers compared with sugar mills, according to the Indian Sugar Mills Association. Jaggery, a traditional unrefined sugar, is a concentrated product of cane juice, without separation of the molasses and crystals, and can vary from golden brown to dark brown in color.