Sugar mills and other food processors have entered into contracts to import over 1.2 million tonnes (mt) of sugar in the last one month, contrary to the perception that no fresh buying is taking place due to high global prices.
According to official data, sugar mills, traders and food processors have signed contracts with overseas producers to import over 1.2 mt, including 1.04 mt of raw variety, so far since January 8, 2010.
During a meeting with Prime Minister Manmohan Singh recently, the sugar industry has said that no fresh contracts could be signed unless there is an “import price parity”. It had said that the country needs to import 1.6 mt more this season than the quantity already contracted.
Total contracts registered with the government stands at 4.62 mt, that comprise 3.4 mt of raw sugar and 1.22 mt of refined variety since August 13, 2009.
The industry has not gone slow in signing fresh contracts as can be seen from the data. Between August and November 2009, the country had contracted to import 2.73 mt while it is about 1.9 mt during December-January.
Government officials said that the industry is on a wait and watch mode to assess the sugarcane plantation, a clear picture of which will be available by the end of March.
“Had the industry serious, there would have been more contracts signed in December, as only about 650,000 tonnes of deals finalised during the month,” a senior official said.
Currently, refined sugar is trading at about $736 (Rs 33,915) a tonne in London while the wholesale rate in Delhi market stands at about Rs 41-42 a kg.
But on December 1, the global price was about $619 (Rs 28,521) a tonne and local rate here was about Rs 36,000 a tonne. The raw sugar price is normally about $100 dollars less than the refined.
Recently, the Indian Sugar Mills Association had said that global prices of sugar might decline in April when new sugarcane crop arrives in Brazil, the world’s largest producer.
Food and Agriculture Minister Sharad Pawar had said that sugar prices are likely to come down in 2010-11 season, beginning September.
Sugar price in the retail market had surged close to Rs 50 a kg in the second week of January from about Rs 22 a year-ago.
The country is facing a shortfall in production for the second consecutive year as output is estimated at 16 mt for 2009-10 season (October-September) against an annual demand of 23.5 mt. The gap is being met though imports.
Source : Business Standard