Indian sugar millers may resume signing import deals as local prices have surged amid a slip in global prices, but large-scale buying is unlikely as enough quantity has been already contracted, industry officials said. "Atmosphere is favourable for striking import deals.
It has improved compared to a fortnight back," Prakash Naiknavare, managing director, Maharashtra State Co-operative Sugar Factories Federation Ltd, said. Spot sugar price in top producer Maharashtra has risen over ten percent to 3,126.8 rupees ($64.3) per 100 kg this month on robust festive demand and thin supplies. The key ICE October raw sugar contract settled down 1.54 cent or 6.7 percent to finish at 21.60 cents per lb on Friday, the lowest level in over a month.
"The disparity between international and domestic prices has reduced. It is possible they (millers) can start importing," Yatin Wadhwana, managing director of Sucden India Pvt Ltd, told Reuters. Indian millers, after signing deals for about a million tonnes in August, have skipped the international market this month as raw sugar futures hit 28-1/2 year peak, while whites hit a record expecting strong demand from the South Asian country.
"Still there is gap of $30-$40 (a tonne between domestic and overseas prices)," Naiknavare said. India has contracted imports of 4 million tonnes so far this year and is expected to buy 4-5 million tonnes in the new 2009/10 season, a Reuters poll found last month.
Industry expects about 3 million tonnes of raws purchased in 2008/09 would be processed and consumed next sugar year beginning in October. "India still needs to buy between a million and 2 million tonnes of sugar," Jonathan Kingsman, head of the Kingsman brokerage, told Reuters on the sidelines of a sugar conference last week. Out of total sugar import deals of about 4 million tonnes in 2008/09, most were for raws as white imports wasn't lucrative. "White sugar imports are not economically viable. There prices are too high," Naiknavare said.
London white sugar October contract ended $16.60 lower at $520.60 per tonne on Monday, with prices falling sharply after setting a record high for the front month of $603.60 last week. "They (Indian millers) have already bought enough quantity. I don't think they will enter into market again aggressively," said Veeresh Hiremath, a senior analyst with Karvy Comtrade Ltd. India's sugar output in 2009/10 is expected to reach 16-17 million tonnes, far lower than the initial estimate of 20 million tonnes, while annual demand is pegged at 23-24 million tonnes, industry officials say.