NEW DELHI: India may not need white sugar imports at zero duty and imports of raws may be lower than earlier expected as local prices have
fallen, Union food and agriculture minister Sharad Pawar said on Wednesday, pushing futures prices down.
Soaring local prices ahead of general elections scheduled in April and May had encouraged the government to ease import rules for raw sugar last month. Traders had speculated the government may also scrap the 60% import duty on white sugar, but Mr Pawar said this may not be necessary as prices had fallen.
Sugar in the spot markets of Maharashtra, the top producer, has retreated 9% from this year’s peak of Rs 2,181 per 100 kg on February 3. “If the situation continues, we may not require to import white sugar,” Mr Pawar said. Lower prices had also hit raw sugar imports, he said.
Raw and white sugar futures fell after the minister’s comments. “It’s no surprise the market is lower,” said Nick Hungate, a soft commodities trader with Rabobank in London. Benchmark ICE May raw sugar futures were down 0.2 cent, or 1.7%, at 12.78 cents per pound at 17:00 pm IST, while London May white sugar was down $6.8, or 1.7%, at $391.2 per tonne.
Mr Pawar said country’s sugar output in the year to September would touch 16 million tonnes, above the Indian Sugar Mills Association’s expectation of 15.5 million tonnes. He also said sugar stocks at October 1 last year, the start of the current season, were 10 million tonnes, higher than trade body estimates of 8 million tonnes. Mr Pawar said for the next four weeks he would be campaigning for general elections, leaving little room for any major policy initiatives in the farm sector. By the time the new government assumes office in the middle of May, the country would have completed purchases of new season wheat from farmers.
Analysts say prices have fallen due to a government decision to impose limits on stocks to be held by traders, forcing them to increase supply in the market.
“We are assessing 16 million tonnes of production and carryover stocks were 10 million tonnes. I do not know why the market is nervous,” he said. Country’s sugar production, the world’s biggest producer after Brazil, was 26.5 million tonnes in 2007-08. The fall in projected output this crop year had helped domestic prices surge by a quarter in six months, before they started falling in recent weeks.
Last month, the government allowed mills to import raw sugar at zero duty provided they export an equal quantity of whites within 36 months.
Mr Pawar said for the next four weeks he would be campaigning for general elections, leaving little room for any major policy initiatives in the farm sector. By the time the new government assumes office in the middle of May, the country would have completed purchases of new season wheat from farmers.
India’s successive bumper crops of wheat and rice had created a storage problem for the new season wheat, but Mr Pawar said a decision on lifting curbs on grain exports could not be taken until wheat purchases are completed by May.
“There is a problem of storage and that is why we are continuously shifting stocks from wheat-producing states to non-wheat producing states,” the farm minister said.
Mr Pawar said country’s wheat output in 2009 was expected to be around last year’s record of 78.6 million tonnes, while purchases by government agencies were likely to be higher than last year’s all-time high 22.7 million tonnes.
The next government would have to review export curbs on wheat and non-basmati rice, he said. The government banned exports of non-basmati rice in April 2008 to check rising prices.
Source : The Economic Times