Sugar falls in NY on India's export plans

Sugar futures in New York fell, declining for the second straight week because of India's plans to boost exports and speculation that high taxes will keep shipments to Russia from increasing.

Russia, the largest importer of the sweetener, will keep the seasonal duty on raw-sugar imports at $220 a metric ton in May, the Sugar Producers' Union said.

The tax previously was $140 a ton. Exports from India may rise to 5 million tonnes in the year ending September 30 from an earlier forecast of 3.5 million tonnes, Prakash Naiknavare, managing director of the Maharashtra State Co-operative Sugar Factories Federation, said last month.

"Russia may delay buying,'' said Michael McDougall, a senior vice president for Newedge USA LLC in New York. "India is trying to sell before the monsoon season,'' which begins in June.

Sugar futures for May delivery fell 0.4 cent, or 3.3 per cent, to 11.73 cents on ICE Futures US, formerly the New York Board of Trade, the biggest drop for a most-active contract since March 19.

Futures may trade between 11.25 cents and 12.25 cents next week, McDougall said. Sugar rose 50 per cent in the three months through February. Futures have fallen 20 percent in March, partly because of concerns that global production will exceed demand.

Output may surpass use by 1.9 million tonnes in the next season, compared with a 10 million-tonne surplus in the current crop year, C Czarnikow Sugar Futures said earlier this month.

Global surplus
The global surplus was 11.2 million tonnes in the year through September 2007 and will reach 9.3 million tonnes this year, the London-based International Sugar Organization forecasts.

"The inventories should be enough to keep prices under a firm leash, barring a repeat of the recent unbridled plunge into sugar by fund money, until clearer evidence emerges of this stockpile disappearing,'' according to a report today by Fortis Bank SA/NV and VM Group.

"The weak fundamentals are why the market wasn't able to get strength from improved commodity performance,'' McDougall said.

The UBS Bloomberg Constant Maturity Commodity Index rose 1.1 per cent yesterday while sugar dropped 0.9 per cent.