India, the second-biggest sugar producer, should scrap a duty on imports of the raw variety to boost supplies as dry weather threatens to cut domestic output for the first time in four years, according to ED&F Man.
Traders and mills must be allowed duty-free purchases with an obligation to re-export the same quantity in March, when supplies are expected to be comfortable, Rahil Shaikh, managing director of ED&F Man Commodities India Pvt., said yesterday. Imports may help cool a rally in domestic prices, he said. Raw and refined sugar imports attract a 10 percent duty.
Imports by India, the world’s biggest consumer, may help stem a decline in global prices, while curbing local rates, which surged to a 20-month high last month. Futures in New York have fallen 13 percent this year on expectations that global supplies will top usage.
“Imports of raw sugar will help mills utilize their capacity and will bring in stability in local prices as stocks are depleting,” Shaikh said in an interview in New Delhi. “It’s not lucrative to import raw sugar at a 10 percent duty as there is no parity. Imports will happen if duty is removed.”
Sugar prices on the National Commodity & Derivatives Exchange Ltd. have surged 23 percent since the end of May on concern below-average monsoon rain will hurt crop yields. The October-delivery contract fell 0.4 percent to 3,545 rupees ($64.2) per 100 kilograms at 10.14 a.m. in Mumbai. The March- delivery contract rose 0.3 percent to close at 20.16 cents a pound on ICE Futures U.S. in New York yesterday.
India will have sufficient supplies to meet local demand in the season starting Oct. 1, allowing exports for a third year, Food Minister K.V. Thomas said yesterday. The government won’t scrap the duty on raw-sugar imports, he said last week.
The Surplus available for exports may total 1.5 million tons in 2012-2013, 57 percent less than the 3.5 million tons estimated for this year, Abinash Verma, director general of the Indian Sugar Mills Association, said Sept. 10.
Production in India may total 23.5 million tons next season, compared with a local demand of 22.5 million tons, ED&F Man’s Shaikh said. That’s less than the 24 million tons estimated by the mills’ association.
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