Global sugar prices may get monsoon spike

International sugar prices may rise after latest Indian meteorological data stated that the country's rainfall during June 1-22 is 49 per cent below normal, leading brokerage Sucden said in its latest report. Indian traders, however, said monsoon could not be the reason for a price rise as the country's cane sowing is progressing well.

London white sugar, August futures posted fresh gains to end $3.80 higher at $274.00 a tonne, Thursday. New York raw sugar, October futures rose 0.07 cents to close at 9.18 cents a pound.

India has imported nearly 2 million tonne raw sugar since October last and exporters abroad feel, global prices could rise if the Asian nation is forced to import similarly large quantities in the coming months.

However, Indian traders feel it is too premature to give such a projection since cane output this year on the back of good sowing last year is expected to be on the higher side. This is likely to give a boost to sugar output, which is pegged at 17.5-18.5 million tonne in the 2005-06 season to September.

Sugarcane acreage, as on June 20, has increased marginally to 3.5 million hectares from 3.4 million hectares on the same day last year. Even, though cane acreage is higher on year, there has not been any additional sowing reported under the crop during the week to Monday.

Even if monsoon turns out deficient in July and cane output is hit, if will in turn effect sugar production only in the 2006-07, October-September season, a Delhi-based trader said.

Sucden too conceded that the world market's current strength is derived from funds taking long positions in sugar futures and sizeable amount of trade buying.

Meanwhile, domestic spot sugar prices ended lower in thin trade as traders wait for the announcement of July-September quota details, Mumbai traders said on Friday last. Sugar futures also ended lower in thin trade.

"Trading was thin today, as traders want to wait for the announcement of sugar quota before planning purchases," said a Mumbai-based trader.

According to Mukesh Kuvadia, joint secretary Bombay Sugar Mills Association, only 400-500 tonnes were traded in the Vashi market on Friday, less than the average trading volume of 700 tonne.

M-grade sugar futures on the National Commodity and Derivatives Exchange ended lower at Rs 1,782 per 100 kg, down Rs 8.

Traders with the exchange have also adopted a wait-and-watch policy till the sugar quota is announced, a trader with the commodity exchange said.