India, the world’s biggest sugar user, may have imported enough of the commodity this season to fill the gap in supplies, the nation’s biggest importer said.
Mills have contracted to buy about 2.28 million tonnes, including 80,000 tonnes 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, said.
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 per cent since January on forecast of a global deficit, driven mainly by the drop in India’s production.
“Current prices are unattractive and only a few cargos 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 per cent to 15.56 cents a pound in New York on Tuesday 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 pm 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 per cent to 14.8 million tonnes this year. Production has fallen for two years from a record in 2006-07.
Global output will drop a record 20 million tonnes for the current season, according to Czarnikow Group. The deficit may narrow to 6 million tonnes in 2009-10 as output increases in India and Brazil, the brokerage said June 1.
India may import about 2 million tonnes in the year starting October 1, Murkumbi said. That’s less than the 2.5 million tonnes 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.”
