Sugar exporters in India, the world’s second-biggest producer of the sweetener, are delaying signing new contracts after domestic prices last month climbed the most in at least three years amid forecasts for a lower crop.
Wholesale prices in July rose 16 per cent at Vashi, a Mumbai suburb and the country’s biggest sugar market, to Rs 17,160 ($405) a tonne, matching levels on London’s Liffe exchange.
“Domestic prices have caught up with global rates and there are signs of them rising further,’’ Narendra Murkumbi, managing director of Shree Renuka Sugars, India’s biggest refiner, said. “Nobody in India is willing to enter into forward contracts for exports.’’
Reduced exports from the South Asian nation may bolster raw sugar prices which have jumped 44 per cent in the past two months on speculation of lower output in Brazil and India. Global output may decline for the first time in four years starting in October, according to German researcher F.O. Licht.
Raw sugar traded in New York gained 1.4 per cent 14.13 cents a pound on August 1, the highest close since March 5, according to data on the Bloomberg. Prices may trade between 13.5 and 15 cents a pound until October, Murkumbi said.
India’s production may drop 25 per cent in the year starting October to 20 million tonnes as farmers reduced the area planted to cane due to insufficient rainfall, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories on July 15.
“There were some concerns about the condition of the crop planted in Maharashtra because of less rains,’’ Murkumbi said. “Rainfall in the past few days has helped the crop but one needs to see how the monsoon fares in the days to come.’’ The monsoon season was 2 per cent below normal until July 30.
