Indonesia is planning to buy additional raw sugar this year on top of the initial quota of 1.67 million tonnes to ensure the industry has enough stock by year-end, trade minister said on Wednesday. "If traders, users, and producers feel stock is enough, there won't be any price spike," Mari Pangestu said. She said the details of additional quota will be announced within one to two weeks.
An industry source, who asked not to be named, said the government is likely to permit state firms to import 180,000 tonnes of raw sugar and private refiners to buy 220,000 tonnes. The government has so far permitted eight refiners to import 1.435 million tonnes of raw sugar. Diah Maulida, director general for foreign trade at trade ministry said her office had just issued new permits for raw sugar imports but they are part of the existing quota.
Indonesia still relies on imported raw sugar to produce high quality refined sugar used in the food and beverage industry. Recent price spikes have led to concerns that the food and beverage industry may have also bought local white sugar, which by regulation can only be sold to consumers or used as a raw material by small-scale food and beverage companies.
The food and beverage industry has said it is facing a sugar shortage of around 200,000 tonnes. Adig Suwandi, corporate secretary of state firm PT Perkebunan Nusantara XI, told Reuters that if the government wants to allow state firms to import raw sugar, it should decide sooner than later because shipment will take time.
"We plan to buy raw sugar from Brazil. It normally takes one and a half months for shipment from Brazil to arrive," he said. State firms, which normally crush sugar cane from farmers and state plantations, have not received any import quota this year. Any imports may be used to utilize its idle capacity when the crushing season ends in November.
The government is currently studying various options to contain the rally in sugar prices, which tracks the rally in global prices. Raw sugar futures edged lower early on Wednesday but could reverse higher in volatile trade to test a fresh 28-1/2 year high above 24.85 cents a lb while London October white sugar stood $2.50 lower at $580.00 per tonne, in a technical correction after setting a record high for the front month of $603.60 on Tuesday.