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Sugar futures jump most in three months as India said to allow imports

LiveMint logoLiveMint 06-04-2017 Isis Almeida

London: Raw sugar futures jumped the most in three months after India moved to allow some imports.

The world’s second-largest producer and top consumer will authorize inbound shipments of 500,000 metric tonnes of duty-free raw sugar, according to government officials. A notification is being tabled in parliament later Wednesday, said the officials, who asked not to be identified.

India is facing shortfalls after sugar production tumbled due an El Nino-induced drought last year. That led the country to seek supplies elsewhere and scrap its usual import tax of 40% for limited quantities. Imports come at a time the global sugar market is expected to be in a deficit for a second year.

“Imports into the country were widely expected given tight stocks,” Warren Patterson, a commodities strategist at ING Groep NV, said in an emailed report. “The question now is whether 500,000 tonnes will be enough. We believe that there is potential for further imports.”

Sugar surge

Raw sugar for May delivery gained as much as 4.9%, the biggest increase for a most-active contract since 3 January. Futures were trading 3.85 higher at 16.78 cents a pound by 7:21am in New York.

In London, white sugar for the same month added 2.4% to $475.40 a ton on ICE Futures Europe. The intraday gain of 3.8% was the biggest since 28 December.

Sugar production is set to fall to 20.3 million tonnes, the lowest level since the 2009-10 season, according to Indian Sugar Mills Association. The duty-free imports will be allowed until 12 June, said the officials.

The time limit on India’s plan will benefit companies with stockpiles that haven’t cleared customs or have sugar in vessels already at sea that can change the destination, said Sean Diffley, head of sugar and ethanol at Tropical Research Services, which advises several hedge funds.

Traders and analysts estimate India will need about 1 million to 3 million tonnes of raw sugar imports to bridge its production gap. The longer it takes to bring in raw supplies, the more it will need to import white, or refined, sugar because of limits on how much the nation’s refineries can process. Bloomberg

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