Sugar prices climb to 28-year high in New York

LONDON | MUMBAI: Sugar prices rose, extending a rally to the highest price since 1981, as investors increased buying in anticipation of a second straight global production deficit.

Sugar has more than doubled this year as adverse weather limits cane harvests in Brazil and India, the world���s largest producers.

Demand from Russia, Egypt, Indonesia and India, which is also the biggest consumer, will continue to support prices, analysts said. The US may increase import quotas to cover a supply shortage, the department of agriculture said last week.

"There's some sort of organic growth based on renewed interest,��� said Sergey Gudoshnikov, an economist at the International Sugar Organisation in London. "The fundamentals and macroeconomic factors are coming together and more money is there."

Raw-sugar futures for March delivery rose 0.87 cent, or 3.6%, to 24.97 cents a pound at 9:39 a.m. on ICE Futures US in New York. Earlier, the price reached 25.15 cents, the highest for a most-active contract since February 1981.
However, sugar prices extended its losing streak into a sixth day in Indian markets on Tuesday, to the lowest level in over seven weeks, on stock limits and weak demand after government increased quantity of subsidised sugar, dealers said.

In Kolhapur, a key market in top producer Maharashtra, the price of the most traded S-variety sugar fell by 0.6% to Rs 2,800 per 100 kg. The spot price has shed 12% since hitting a record peak of Rs 3,177 on September 5. In Vashi wholesale market, S-variety sugar eased back further by Rs 30/40 to Rs 2,920/2,960 per 100 kg and M-variety sugar fell by Rs 10/30 to Rs 2,970/3,060 per 100 kg.

"Government is selling more sugar at lower price. That pulled down demand in open market," said Mukesh Kuvadia, secretary of Bombay Sugar Merchants Association. The government has doubled the mandatory sale of low-cost levy sugar by millers to 20% from the start of the new season, Food Secretary Alka Sirohi said earlier this month.

Demand from bulk consumers was also weak due to stock limits, Mr Kuvadia said. The government has imposed stock limits on big sugar consumers, wholesale traders and retailers to check hoarding.

Demand for sugar goes up during the country's peak festival season from August to October, as people consume more sweets and confectioneries. India consumes about 23 million tonnes of sugar a year, but produced only about 15 million tonnes in the year ending September and output is seen at 16 million tonnes in the next year.

India's sugar stocks fell to 4.2 million tonnes on August 31, down 30% from 6.0 million tonnes a month earlier, trade sources said.