Sugar imports by India seen jumping as prices plunge on glut

23-May-2013

New Delhi: Sugar imports by India, the world’s biggest consumer, are set to surge as a slump in global prices to the lowest level in almost three years spurs purchases by refiners, according to a millers’ group.

“Processors have imported 1.1 million tonnes (mt) of raw sugar since 1 October, including as much as 468,000 tonnes for sale in the local market,” Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd, said in an interview. “An additional 416,000 tonnes has been contracted for delivery in the coming months,” he said.
Sugar tumbled to the lowest since July 2010 in New York on Thursday on signs the harvest is accelerating in Brazil, the world’s largest grower. Production globally will be 10 mt more than consumption in 2012-2013, boosting a glut for a second season, the London-based International Sugar Organization (ISO) said on Wednesday.

“Imports will increase which will further damp domestic sugar prices,” Kumar said by phone. “We don’t need sugar imports as there is a surplus locally.”
“Inventories may jump 45% to 9.7 mt on 1 October from 6.7 mt a year earlier as output exceeds consumption for a third year,” Kumar said. “That will leave an exportable surplus of 3.87 mt even after keeping about 5.8 mt to meet demand for three months,” he said.
Longest slump
Futures are heading for a third year of declines, the longest slump since 1992. The contract for delivery in July dropped as much as 0.5% to 16.56 cents a pound on ICE Futures US on Thursday, the lowest for a most-active contract since July 2010. Futures in India have lost 5.7% this year.

“Imports can happen as global prices are low and domestic prices are better than that,” said G.S.C. Rao, chief executive officer of Simbhaoli Sugar Mills Ltd. “None of the mills is getting into it in a big way other than the refiners.”
“Mills have asked the government to increase the import duties on raw and refined varieties to 30% from 10% now to check cheap supplies from overseas,” said Abinash Verma, director general of the Indian Sugar Mills Association.
“We have enough sugar in the country and next year’s production should at least meet the consumption requirement,” he said in a phone interview. “Why import sugar now?”

“India’s production may drop for a second year to 23 mt in 2013-2014 from 25 mt this season,” Kumar said. The harvest will fall to 23 mt, according to a Bloomberg survey in March.
Global sugar production will climb to an all-time high of 181.7 mt as output gains to the highest levels in leading producer Brazil, Mexico and the US, ISO said. That compares with 174.3 mt in 2011-2012. The amount of sugar available for exports will rise to 55.9 mt in 2012-2013 from 54.3 mt a year earlier, the sugar group estimated. Bloomberg

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