News
02.09.2009
India buys 900,000 tonnes Brazilian raw sugar
India, the world's largest sugar importer, is estimated to have bought 900,000 tonnes of raw sugar from Brazil over the last three weeks, but the latest rally in New York has blunted its appetite, Jonathan Kingsman, head of the Kingsman brokerage, said on Monday.
"Every time the market dipped on the futures below 21.50 cents, it uncovered Indian buying. Last Friday, the futures market rallied strongly on speculative buying, so that's taken the market away from Indian buying," Kingsman told Reuters ahead of a sugar conference in the Indian capital.
"The total tonnage bought by Indian importers could have reached 900,000 tonnes over the last three weeks, up from an earlier estimate of 500,000 tonnes. That's raw sugar from Brazil to India for shipment during 2009," he said. Brazilian raw sugar was trading at 120 points below New York's front-month contract for prompt shipment and at a discount of 85 points for September shipment, with freight rates steady at $43 to $45 a tonne to India from Brazil, he said. New York's October raw sugar contract jumped 1.03 cents, a rise of more than 4.5 percent on the day, to end Friday at 23.52 cents per lb, its strongest finish since early 1981, on worries about tight supplies and the prospect of huge Indian demand.
A prime catalyst for the relentless rally in sugar is the worst monsoon in 40 years in India, which is forcing the teeming South Asian nation to book large imports of sugar ahead of its annual festival season.
Kingsman said the brokerage's estimate for India's sugar output was unchanged at 17 million tonnes in the 2009/2010 crop year, up from 14.8 million tonnes in 2008/09. "The consensus in the market is probably 2 million tonnes of production less. The consensus is probably 15 million. The monsoon has been difficult but the rain has been improving, so we are hopeful that it will be a little more than 15 million," he said.
"So we are sticking with our 17-million-tonne estimate. The thing to remember is that everybody is very quick to lower the estimates for production, but if the rains are good and the weather is good, then it might better than 15 million." Kingsman said the global sugar market remained bullish but dealers should expect wild swings in prices. "I think we are going to see a lot of volatility, so we could see some major setbacks in the short-term, but I don't feel as if the market has peaked yet," he said, without giving a price range.
Reuters
