Bulk Sugar Users May Increase Stockpiles in India Amid a Slump in Prices

India, the world’s biggest sugar consumer, may ease limits on stocks that producers of cookies, beverages and other bulk consumers of the commodity can hold because of a slump in prices, a government official said.

Industrial users, who represent 70 percent of the nation’s annual sugar demand of 23 million metric tons, may be allowed to keep 15 days requirement against 10 days now, said the official, who declined to be identified ahead of a final decision.

Raw-sugar prices in New York have plunged 50 percent from a 29-year high on reports of improved crop prospects in Brazil and India, the top producers, and delayed orders by buyers including Egypt and Pakistan. That’s prompted millers in the Asian nation to lobby for ending curbs aimed at improving local supplies.

“We’ve requested the government to put no limit on stocks held by bulk consumers,” Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd., said in an interview. “The situation has changed. Prices have fallen.”

Prices in Mumbai, India’s biggest wholesale market for the sweetener, have fallen 31 percent from a record 4,050 rupees per 100 kilograms on Jan. 8 after the government extended duty-free imports of white sugar until Dec. 31 and predicted production may be more than previously estimated.

Output may be 23 million tons in the year ending Sept. 30, 2011, compared with 18.5 million tons forecast this year, Kumar said April 20. The increase may reduce the need to import as a stockpile of 3.5 million tons from the 2009-2010 season will add to supplies, he said that day.

India became a net buyer of the commodity since 2008 after cane growers switched to planting wheat and oilseeds, and last year’s drought damaged crops, pushing prices in New York to near the highest in three decades.

To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net; Prabhudatta Mishra in New Delhi at pmishra8@bloomberg.net

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