Sugar prices in India, the world's largest consumer, fell about 4 percent on Friday after the government said it would release an additional 400,000 tonnes of stocks for the current quarter. The decline was also helped by market talk that India might consider lowering 60 percent duty on imports of white sugar to rein in prices, which surged 40 percent in 2004 following a dismal output, traders said.
Food Minister Sharad Pawar told reporters on Thursday the additional sugar release for the January-March quarter was besides the 4.05 million tonnes already announced.
He also warned the government may allow white sugar imports to cool prices.
"There is a definite impact of the minister's statement on prices and I think prices will stabilise at the current levels for some time," said Mohan Gurnani, president of the Bombay Sugar Merchants Association.
Prices fell to 17,000-17,200 rupees ($387.9-$392.4) a tonne, ex-mill, Bombay, from 17,700-17,900 on Thursday.
February Sugar futures at the National Commodity and Derivatives Exchange were quoted at 1,801 rupees per 100 kg at 0815 GMT, down from 1,811 rupees from the previous close and 1,935 rupees on Dec. 31.
A trader said prices had also fallen in the Delhi market, mainly because of the additional quantity released.
India had a dismal sugarcane output in the year ended September, 2004, and is expecting another poor crop this year because of a drought in some cane-growing states.
Pawar said there was no shortage of sugar as yet and the price spiral was due to speculation.
The government, which controls the supply of sugar in India by allocating fixed quantities that can be sold by producers, also relaxed the time for mills to export raw sugar imported under a license scheme, to 36 months after refining from 24 months.
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