India, the world's largest sugar consumer, could become a major importer in 2004/05, buying up to four million tonnes as the country draws down stocks after dismal harvests, an informal poll of European analysts said.
India had a poor cane sugar harvest in 2003/04 and expects another disappointing crop in 2004/05 because of drought.
Talk of a spike in Indian demand is a hot topic in sugar markets, and traders say it has helped fuel a bull run that has pushed US raw sugar futures up around 50 percent this year.
"We have pencilled in around four million tonnes of imports," said Roger Bradshaw, executive director, food and agribusiness of Rabobank International.
"Whether this is raw or white will depend on the timing of imports. If raw, then it would need to be imported by January 2005 at the latest to blend in with the current crush," he said. "Otherwise, imports will be whites until the new crop starts."
An analyst with a European trade house said: "We believe India needs to import four million tonnes - the split between raws and whites depending on the price spread between New York (NYBOT) raw sugar futures and domestic values.
March raw sugar futures on New York's NYBOT exchange closed up 0.11 cents a lb at 9.04 cents a lb on Wednesday.
"Basis March New York raws at around nine cents, we see India buying one million tonnes of raws and three million tonnes of whites," the analyst said.
"If New York crashes to eight cents a lb, then we could see 2.5 million tonnes of raws and 1.5 million tonnes of whites."
Toby Cohen, director of research at merchant Czarnikow, said he believed India would need to import some 3.5 million tonnes.
"We have this geared towards raw sugar imports," he told Reuters. "However, we think that unless the mills act in the very near term, the window of opportunity will have been lost."
A trader with a London house estimated Indian buyers had already bought between 800,000 and one million tonnes this year.
"I think they will buy a minimum of 500,000 tonnes of raw sugar, but this must arrive by mid-March to be refined in their crop melt," he said.
Merchant ED&F Man Sugar Ltd said in a report on Tuesday that India is expected to need more than one million tonnes of raw sugar on international markets over the next six months.
"If it were to be deferred beyond the current harvest season, which ends in April in most regions, this demand could be for whites rather than raws," ED&F Man said.
"This would leave the raw sugar cover, currently being held back by producers, as surplus, while the whites balance would fall into deficit," it added.
Paris-based Jonathan Kingsman said most statisticians were estimating October/September 2004/05 Indian imports at between 1.5 and 2.0 million tonnes.
"So far, excluding what has already entered the country, we understand that about 800,000 tonnes have been contracted for."
Kingsman added: "However, some of that sugar has already been sold back - and continues to be sold back - as world prices rise and import margins evaporate."
He was referring to talk in the markets that some Indian buyers had sold back cargoes of sugar to sellers to take a profit from rising sugar prices.
The International Sugar Organisation (ISO) said in its latest September market report that if the government decides to keep the minimum stocks at a critical level of three months' consumption, India will have to import 2.2 million tonnes between October 2004 and September 2005, on top of 0.3 million tonnes of already imported raw sugar.
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