NEW DELHI- India is likely to import an additional 1 million metric tons of sugar in the current marketing year to help bridge a shortfall it faces for the second year in a row due to low crop output and high demand.
Millers in India, the world's largest sugar importer, are negotiating fresh import contracts to boost local supplies.
Sugar production is estimated to reach around 16 million tons in the 2009-10 marketing year that started Oct. 1, while annual demand is 23 million tons.
Federal Agriculture and Food Minister Sharad Pawar said the ban imposed on imported raw sugar in the state of Uttar Pradesh, India's second largest sugar-producing state, was one of the main reasons for supply shortfall.
"Had the imported raw sugar been refined, around 200,000 tons to 250,000 tons of additional sugar would have been available in the market per month," he said on the Star News television channel.
The Uttar Pradesh government imposed a ban in November on the supply of imported raw sugar to mills in order to protect local cane growers, who were demanding higher prices from millers.
As a result, about 770,000 tons of raw sugar is still lying at various ports, said an industry official.
The federal government is considering changing the rules to allow sugar mills in Uttar Pradesh to process their imported raw sugar in other states, which will help boost domestic supplies.
The availability of imported raw and white sugar as of Jan. 7 stood at 5.95 million tons, which means the country will have to import another 1 million tons to meet the deficit, a senior food ministry official, who didn't wish to be named, told Dow Jones Newswires.
The required imports could be mainly of white sugar, he said.
India's trading companies imported 370,000 tons of white sugar between Oct. 1 and Jan. 7, and have signed import deals for another 700,000 tons, which will arrive in phases through September, the official said.
Raw sugar imported by mills from Oct. 1 to Jan 7 was 1.85 million tons, and deals have been signed for the import of another 1.6 million tons for arrival by September-end, he said.
However, the International Sugar Organisation questioned how much of sugar purchased overseas will be physically delivered.
"In any case, there is a growing belief within the trade that India has already bought all sugar it needs for the current season," the International Sugar Organisation said in its December report.
Domestic sugar prices touched new highs in the local market last week following a supply shortage, brightening the prospects for white sugar imports.
The landed cost of imported white sugar is about 37,500 rupees per ton ($815 per ton), while local wholesale sugar prices have risen more than 20% to 40,000 rupees per ton in the last two months due to fears of a shortfall in production.
India's sugar output from Oct. 1-Dec. 15 was down 2.7% from the same period a year earlier at 3.6 million tons because of delays in crushing.
Source : wsj.com