Raw Sugar Declines to One-Year Low as India May Reduce Imports

Raw sugar fell, extending a decline to the lowest price in more than a year, on speculation that India, the world’s biggest consumer of the sweetener, may curb imports. White sugar dropped to a one-month low.

India may impose a 60 percent duty on sugar shipments to stop imports amid industry concern that domestic prices may collapse if purchasing continues, the Business Standard reported. India may become a net exporter next year as domestic output could exceed demand for the first time in three years, the country’s farm minister said earlier this week.

“Unsurprisingly, the recent positive supply data from India has dampened prices and sentiment,” Sudakshina Unnikrishnan, an analyst at Barclays Capital, said today in a report.

Raw sugar for July delivery declined 0.1 cent, or 0.7 percent, to 14.41 cents a pound on ICE Futures U.S. in New York. Earlier, it touched 13.84 cents, the lowest level for a most- active contract since April 29, 2009.

White sugar for August delivery slipped $2.40, or 0.5 percent, to $450.80 a metric ton on London’s Liffe exchange. Earlier, the price reached $440, the lowest since April 1.

India will produce 24 million to 25 million tons in the year starting Oct. 1, at least 30 percent more than the estimated 18.5 million tons this year, analysts at Sucres et Denrees SA said last week. In February, the Indian government predicted output as low as 15.6 million tons for the current season.

Raw Sugar Slumps

The price of raw sugar, which more than doubled last year as excess rains in Brazil and a weak monsoon in India crimped supply, has slumped 47 percent this year on bets that increased supplies will help erase a global deficit.

“We expect the recent downtrend to be maintained until such a time as end-user countries find a level where they might be willing to replenish physical stocks,” Nick Penney, a trader with Sucden Financial Ltd. in London, wrote in a note today.

A stronger dollar also weighed on prices. The U.S. Dollar Index, a gauge of the currency’s performance against six major counterparts, rose for a third day. Most raw materials slid, pushing the S&P GSCI Total Return Index of commodities down by as much as 3.4 percent.

source: businessweek