Sugar Climbs to Two-Decade High as India May Increase Purchases

By M. Shankar

Jan. 20 (Bloomberg) -- White sugar surged to the highest price in at least two decades in London on speculation that India and other importers will purchase more of the sweetener as a supply deficit looms.

India, the world’s largest consumer, may import 2 million metric tons in the year ending Sept. 30, up from 225,000 tons in the previous 12 months, said R.L. Tamak, business head for sugar at the Indian unit of Olam International Ltd. White, or refined, sugar prices have more than doubled in the past year.

“Right now, few factories” have refining facilities during the off-season, Tamak said in a telephone interview. “White sugar has to be imported to meet the demand.”

White sugar for March delivery climbed as much as $11.10, or 1.5 percent, to $755 a ton on the Liffe exchange, the highest price since at least January 1989. The contract was at $752.10 a ton at 9:43 a.m. local time.

On ICE Futures U.S. in New York, raw sugar for March delivery gained 0.1 percent to 29.02 cents a pound and earlier rose to 29.15 cents, the highest for a most-active contract since January 1981.

Egypt, Indonesia, Pakistan and Philippines have also said they intend to import sugar to cool domestic prices, crimping supplies.

Excess rains in Brazil and a weak monsoon in India hurt sugar-cane output from the world’s two biggest growers. Global demand for sugar will outpace supply by 13.5 million tons in the 2009-10 season, according to broker Czarnikow Group Ltd.

Among other agricultural commodities traded on Liffe, cocoa for March delivery advanced 0.1 percent to 2,320 pounds ($3,784) a ton. Robusta coffee for March delivery declined 0.8 percent to $1,362 a ton.

To contact the reporter on this story: M. Shankar in London at mshankar@bloomberg.net.