India, the biggest sugar consumer, hasn’t bought the commodity from abroad in the past 45 days as high global prices and a shortage of rail wagons deter buyers, worsening a domestic shortage.

Sugar stocks are mounting at ports, including Kandla in western India,
because of inadequate rail racks, Vinay Kumar, managing director of the
National Federation of Cooperative Sugar Factories Ltd., told reporters
in New Delhi today.

“Warehouses are full and there’s no space,” he said.

India, the biggest producer after Brazil, is buying sugar for a second
year after a drought damaged crops. Output in the season started Oct. 1
will be “little lower” than 16 million metric tons forecast previously
because of a lower recovery, the Indian Sugar Mills Association said
Dec. 2.

Mills and traders imported 2.29 million tons of raw and 225,000 tons of
white sugar in the 2008-2009 season ended Sept. 30, according to the
food ministry.

The government quadrupled charges on detention of imported sugar and
lentils at ports to curb hoarding of the food items, G.K. Vasan,
minister of shipping, informed the parliament Dec. 14. The new rates
will remain valid until March 31.

India is taking measures to increase food supplies after a drought in
the world’s second-biggest producer of sugar, rice and wheat helped
push up inflation to a ten-month high. Retail prices of sugar and
lentils have soared, prompting authorities to raid wholesalers hoarding
commodities.

Record Prices

Prices at Vashi in Mumbai, India’s biggest market for the sweetener,
have surged 72 percent this year, reaching a record 3,536.65 rupees per
100 kilograms ($76) on Nov. 7. Prices have fallen 7.6 percent from the
record as mills began crushing cane after ending a month-long dispute
with farmers on cane pricing.

Mills in Uttar Pradesh, India’s biggest cane-growing state, are paying
farmers between 185 and 220 rupees per 100 kilograms, Farm Minister
Sharad Pawar said today in parliament. The price is higher than 205
rupees mills offered last month to settle a tariff dispute that delayed
crushing of the new crop by a month. Growers in Maharashtra are being
paid 260 rupees, Pawar said.

The upper house of India’s parliament today passed a bill seeking to
fix a nationwide benchmark price of 130 rupees per 100 kilograms for
the season started Oct. 1. The lower house of the parliament passed the
bill last week.

High international prices are also holding back imports, federation’s Kumar said.

Raw sugar in New York and white sugar in London have more than doubled
this year. Futures reached as high as 25.72 cents a pound in New York
yesterday, the highest level for a most-active contract since February
1981. March-delivery refined sugar rose 0.8 percent to $656.20 a ton in
London yesterday, the highest close for a most-active contract since at
least January 1989.

Source: Bloomberg

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