Indian Refiners May Boost Raw Sugar Imports This Year

By Thomas Kutty Abraham

Oct. 13 (Bloomberg) -- Indian sugar refiners may boost imports of raw sugar after contracting to purchase 200,000 metric tons this year as a reduction in plantation area cuts domestic sugarcane output, an industry group said.

Harvests in the world's second-largest sugar-producing nation may drop to 20 million tons of refined sugar in the 12 months ending September 2009, lower than the August forecast of 22 million tons, S.L. Jain, director general of the Indian Sugar Mills Association, said in a telephone interview from New Delhi today. India last imported sugar in the year ended September 2006.

Purchases by India, the world's biggest sugar consumer, may bolster global prices, which dropped to a four-month low last week on concern about a global recession. Sugar for March delivery rose 3.7 percent to 11.64 cents a pound at 1:34 p.m. Mumbai time on the ICE Futures U.S., the former New York Board of Trade. The commodity has fallen 11 percent in the past six months.

``Some refiners have contracted to import raw sugar from Brazil in recent weeks for re-exporting,'' he said. ``Mills may import more in coming months depending on global prices.''

The premium of refined sugar over raw narrowed to $88.72 a ton on Oct. 10 from $99 a ton a week earlier.

Brazilian Imports

Shree Renuka Sugars Ltd., India's biggest refiner, in August bought 30,000 tons of raw sugar from Brazil for October delivery at Haldia, a port on the eastern coast and the site of its 2,000 tons-a-day mill, which started production in June. The commodity was bought tax-free for turning into white sugar for export.

``Global sugar prices are soft and the freight rates have fallen by nearly half, making imports attractive,'' said Sanjay Tapriya, finance director at Simbhaoli Sugar Mills Ltd. ``Importers will still be looking at the premium white sugar has over the raw sugar to decide future purchases.''

India's sugarcane production may decline to 294.66 million tons in the year to June 30, 2009, 13.5 percent less than last year, after farmers shifted to more profitable crops such as grains, according to the farm ministry.

``The crop is in good shape and crushing may begin from the first week of November,'' Sugar Mills Association's Jain said. ``Some mills in Andhra Pradesh have contracted to import sugar as the crop there is not very good.''

India will consider a proposal by sugar mills to allow imports of raw sugar to help them use any idle capacity, farm minister Sharad Pawar said last month. Under the plan, sugar makers will process imported raw sugar and sell the refined sweetener in India. At present, they can import raw sugar duty free only for exporting the refined sugar.

Sugar exports from India have come to almost a `standstill,'' Jain said. The nation may not export more than 1 million tons in the year to September, he said. Exports totaled 5 million tons last year, the Press Trust of India reported on Oct. 2, citing Maharashtra State Cooperative Sugar Factories Federation's Managing Director Prakash Naiknavare.

To contact the reporter on this story: Thomas Kutty Abraham in Mumbai at tabraham4@bloomberg.net