Loading ...News - India to Buy Sugar From Brazil, Guatemala on Shortage
Feb. 18 (Bloomberg) - India, the world’s biggest consumer of sugar, may import as much as 1.2 million metric tons from suppliers in Brazil and Guatemala to overcome a shortfall in output and cool rising domestic prices.
India’s government yesterday notified rules allowing duty- free imports of raw sugar until Sept. 30 for processing and sale domestically. Buyers must export a similar quantity of white sugar within two years, according to the trade ministry.
“There’s definitely a shortfall in production and this can only be met with raw sugar imports,” Narendra Murkumbi, managing director of Sree Renuka Sugars Ltd., India’s biggest processor, said in an telephone interview in Mumbai today.
Purchases by the South Asian nation may help support a rally that’s made sugar the best performing agricultural commodity this year. Prices of raw sugar have gained 12 percent since January in New York amid forecasts of India importing the sweetener for the first time in three years.
Raw-sugar futures for May delivery dropped as much as 0.6 percent to 13.20 cents a pound in after-hours trading on ICE Futures U.S. in New York today. The contract fell 2.1 percent yesterday, the most since Jan. 29.
Production this year may drop below 18 million tons, down from 26.4 million tons last year, S.L. Jain, director general of the Indian Sugar Mills Association, said today. That’s lower than 18 million tons forecast last week by the trade body.
Refiners and mills have contracted to import 700,000 tons so far, Jain said. Shree Renuka and Silkroad Sugar Private Ltd., a venture between Cargill Inc. and India’s EID Parry Ltd., may account for a bulk of the purchases, he said.
Cargill
Shree Renuka plans to import about 500,000 tons from Brazil and Guatemala in the next few months for its plants in Haldia in eastern India and in Karnataka, said Murkumbi. Cargill’s refinery in Andhra Pradesh will process 600,000 tons a year from the first quarter of 2009.
“There’s going to be sizeable imports this year though the higher prices may prevent importers from rushing to strike fresh contracts,” Jain said. Mills may have to pay between $335 a ton and $340 a ton, including cost, insurance and freight, compared with $250 a ton paid about a month ago, he said.
Sugar mills in Maharashtra, together the nation’s biggest producers, ruled out importing raw sugar until September because of a delay in the notification of the rules, Prakash Naiknavare, managing director of the Maharashtra State Cooperative Sugar Factories Federation Ltd., said last week.
A smaller sugar cane crop may force mills in Maharashtra to close by March-end, depriving them of bagasse to generate power required to process the imported raw sugar, Naiknavare said.
New Rules
Under the new rules there will be no limit on the quantity mills and merchant importers can buy abroad. They will be allowed to export using sugar from mills close to the ports to cut costs.
Earlier, duty-free imports of raw sugar were allowed only if the same cargo was processed and sold abroad again. Sugar bought for sale locally attracted a 60 percent duty.
India’s sugar supplies may increase by about 800,000 tons after the government also extended the deadline for mills to re- export under the so-called advance license system, Murkumbi said.
Mills, which need to export refined sugar for importing raw sugar duty free between 2004 and 2005, now need to sell overseas by Dec. 31, the trade ministry said in a notification.
Source: Bloomberg.
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