Indonesia to Boost Raw-Sugar Imports by 445,000 Tons by Yearend

By Yoga Rusmana

Sept. 16 (Bloomberg) -- Refiners in Indonesia, Southeast Asia’s top sugar buyer, will import 445,000 metric tons of the raw commodity by December to cool domestic prices, including 225,000 tons advanced from next year’s state-set allocation.

“The allocation is part of government’s effort to ease the price of white sugar,” Yamin Rachman, executive director at the Indonesian Refined Sugar Association, said by phone today. As of Sept. 1, refiners had shipped in 1.44 million tons of raw sugar from the 1.8 million tons licensed to date by the Ministry of Trade, he said. This year’s full allocation is 2 million tons.

Raw-sugar futures in New York have surged to the highest price in 28 years after drought hurt cane output in India, the largest user, and heavy rains cut yields in Brazil, the biggest producer. Indonesia’s additional raw-sugar imports may help to push U.S. prices higher by raising global demand.

Indonesia, home to the world’s largest Muslim population, is marking the fasting month of Ramadan at present, which culminates in the Eid al-Fitr festival. Both events boost sugar consumption as people eat celebratory meals and sweets.

The average price of white sugar in Indonesia has risen more than 49 percent this year to 9,934 rupiah ($1) a kilogram as of Sept. 15, according to data from the Trade Ministry.

The nation’s refiners may process 2 million tons of imported raw sugar this year to make about 1.8 million tons of refined sugar, Rachman said. Next year, refiners may import 1.865 million tons of raw sugar, while food makers may buy 400,000 tons of raw sugar equivalent, or about 360,000 tons of the white variety of the sweetener, Rachman said.

Regulation

Raw-sugar for March delivery fell 1.6 percent to 23.32 cents a pound on ICE Futures U.S. in New York yesterday. On Sept. 1, the price reached 24.85 cents, the highest for a most-active contract since February 1981.

Indonesia’s sugar industry is regulated by the government, which sets import quotas. Households buy sugar made from cane grown by local farmers, while industrial users import refined sugar directly, or buy the commodity from domestic processors which imported raw sugar.

To contact the reporter on this story: Yoga Rusmana in Jakarta at yrusmana@bloomberg.net