News
28.09.2009
India to extend tax-free white sugar imports
India, the world's largest sugar consumer, will extend permission for tax-free imports of white sugar beyond November but the move is unlikely to trigger immediate purchases as dealers eye cheaper prices.
India, stung by a 43 percent fall in sugar output to 15 million tonnes in the season that ends this month, extended tax-free imports of whites in July to shore up supplies and rein in domestic prices which have surged about 55 percent in 2009.
"We will extend it. This could be extended to May-June," Farm Minister Sharad Pawar told reporters when asked whether imports of whites free of import tax would be allowed beyond November, when the concession is due to expire.
India has so far ordered imports of 606,000 tonnes of whites and expects to receive 200,000 tonnes of the sweetener by the end of this month, but volatility in futures prices have discouraged consumers from striking new deals.
"Global prices must fall below $525 per tonne to make imports viable. White sugar imports are not at all viable at current prices," said Mukesh Kuvadia, secretary general of the Bombay Sugar Merchants Association.
"Whatever white sugar imports we have seen so far, are from the deals struck earlier when prices were a little cheaper. In comparison with white sugar, raw sugar imports will always be higher," Kuvaid said. London's December white sugar contract rose $5.30 to finish at $584.50 per tonne on Wednesday but it was still well below a record of $603.6 struck three weeks ago.
London sugar has gone up as much as 86 percent this year, partly driven by demand from India. New York's October raw sugar fell 0.60 cent to close at 21.55 cents on Wednesday - off a 28-1/2-year high of 24.85 cents in early September.
Analysts said India's latest move could eventually spur a rebound in global sugar prices, which have undergone a series of corrections since hitting multi-year highs in early September on the prospects of strong buying from the world's largest consumer. "We still think there's more upside potential for prices but it will require some more buying from countries such as India or perhaps some confirmation the Brazilian harvest is continuing to lag," said Luke Mathews, commodities strategist at Commonwealth Bank of Australia in Sydney.
"It's likely that the Indians as they draw down the stocks they have bought will come back into the market. That would provide a boost to prices when they do return," he said.
Reuters
