Sugar firms to help calm prices

Producers meet agriculture minister, agree to increase supply of the commodity

India, importing sugar for the first time in three years, said mills agreed to boost the availability to cool record prices, Agriculture Minister Sharad Pawar said.

The mills are “ready to find some solution where we will be able to improve availability in the open market and in the public distribution system,” he told reporters after meeting producers in New Delhi. The mills and producers will meet the minister again on August 19.

Sugar has advanced 62 per cent this year in Mumbai’s Vashi, the largest wholesale market, on concern drought in the biggest cane-growing states will curb prospects for the Indian crop, the world’s second-biggest. The monsoon, which brings three-quarters of the nation’s annual rain, may be the driest in 15 years, the weather bureau said last week.

Production may drop to 14.8 million tonnes in the year ending September, from 26.4 million tonnes, said Samir Somaiya, president of Indian Sugar Mills Association, repeating a previous forecast.

The nation consumes 22.5 million tonnes annually. The country has contracted to import 2.9 million tonnes of raw sugar so far this year, Pawar told the parliament August 6. About 1.84 million tonnes has arrived or is in transit, he said.

Sugar reached a 28-year high of 23.33 cents a pound in New York on August 12 and was at 21.51 cents in after-hours trading at 4 pm Mumbai time. Prices in Vashi jumped 4.5 per cent to Rs 3,082 a quintal after dropping 3.2 per cent on August 14.

Output in the year starting October 1 may be 18 million tonnes, Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd, said last week.

His forecast is higher than 16.5 million tonnes predicted by Maharashtra State Cooperative Sugar Factories Federation Ltd, and 15-16 million tonnes estimated by Bajaj Hindusthan Ltd.

To be sure, rain have returned in the northern and central Indian states the past few days, helping ease dry weather that caused drought in as many as 209 of the country’s 626 districts, the weather office said on Tuesday.

Uttar Pradesh, the biggest cane grower, Madhya Pradesh, the largest soybeans producer, and Bihar, a top grower of rice and corn, received “good rain” over the past few days, Ajit Tyagi, director general of the India Meteorological Department, said.

Sugar fell for a second day in London on speculation recent rain in India will improve prospects for the harvest in October. White, or refined, sugar for October delivery lost 1.6 per cent to $544.2 a tonne by 11:22 am on the Liffe exchange.