Global Sugar Price Linked to India Export Outlook - Analyst

Sugar prices are linked to an expected imminent decision by India on whether to approve exports, and any ruling against Indian exports could pressure prices higher, analyst Jonathan Kingsman said on Wednesday.

"Today's a pretty exciting day because what we're all waiting for at the moment -- what the market is waiting for -- is a decision from the Indian government as to whether they're going to export," Kingsman told Reuters Insider.

"If the country doesn't export in that first quarter (2011) then things will be very tight."

Kingsman, managing director of Lausanne-based consultancy Kingsman SA, said the Indian industry was pressing for approval of two million tonnes of exports, and that the market was pricing in around one million tonnes of exports from January 1.

"The big shock will be if the Indian government doesn't decide to export now, and decides to wait as part of what the finance ministry wants -- worried about food inflation," he said. Jonathan Kingsman, Managing Director of consultancy Kingsman SA, discusses his outlook for the global sugar industry on Reuters Insider TV. ICE front-month March raw sugar futures were down 0.22 cent to 27.74 cents a lb at 1026 GMT, below a nine-month high of 29.23 cents a lb touched on October 21.

Concerns over tight global supplies, and resilient demand, have pushed sugar prices higher in recent months.

Asked to forecast sugar prices at the end of this year, Kingsman said, "I would expect it to be a little bit lower than now by the end of the crop year, but it all depends on those Indian exports."

BALANCED MARKET

Kingsman said he expected global supply/demand to move towards balance after adverse weather in key producers reduced initial expectations for surpluses.

"We're looking for a small surplus in production over consumption for the crop year. But it's not an exact science so if you get a million tonnes either way, it's pretty much balance," he said.

Kingsman was visiting London for London Sugar Week, which gathers hundreds of traders from around the world for events linked to the London sugar trade dinner on Thursday.

source: flex-news-food