Sugar May Drop as Brazil, India Have ‘Bumper’ Crops, Bajaj Says
Raw-sugar prices may tumble as much as 25 percent in the next two months as output exceeds estimates in Brazil and India, the largest producers, according to Bajaj Hindusthan Ltd., the Asian nation’s biggest producer.
Futures in New York may decline as low as 14 cents a pound from 18.7 cents, Kushagra Bajaj, joint managing director at the Mumbai-based company, said in an interview. India’s production may jump to 27 million to 28 million metric tons in the 2010- 2011 season, he said. That’s more than 25 million tons forecast by the Indian Sugar Mills Association on July 7.
Sugar has gained 17 percent this month in New York on signs of rising demand from Asian countries including the Philippines and Pakistan. India will export at least 2 million to 3 million tons next season, lowering prices, Bajaj said. Brazil’s Center South may produce 34.7 million tons in the 2010-2011 season, up from 28.7 million tons a year ago, Sucden, a Paris-based trading company, said July 24.
“Prices can’t hold at current levels at a time when Brazil is producing a record crop and India is forecast to have a bumper crop,” Bajaj said today. “Hedge funds have driven prices up and they are bound to drop.”
Speculative long positions, or bets prices will increase, exceeded short positions by 104,921 contracts on the ICE Futures U.S. in the week ended July 20, according to data from the U.S. Commodity Futures Trading.
October-delivery raw sugar fell 1.1 percent to 18.42 cents a pound on ICE Futures U.S. in New York yesterday. The commodity reached 19.05 cents in intraday trade, the highest level for a most-active contract since March 19.
Planting of sugar cane in India has been “extremely good” as some wheat farmers switched to growing cane, said Bajaj. The area planted to cane increased 13 percent 4.74 million hectares on July 22, the farm ministry said last week.
A bigger crop may depress cane prices in the year starting Oct. 1, Vivek Saraogi, managing director of Balrampur Chini Mills Ltd., India’s second-biggest producer, said July 26.
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- Sugar Plunges Most in Three Weeks on Brazil, India Output Gains
- Sugar Gains as Supplies May Tighten on Brazil’s Port Backlog
- Brazil Sugar-Cane Crop May Yield More Than Expected, Biagi Says
Tags: Bajaj Hindusthan Ltd, Balrampur Chini Mills Ltd, brazil, futures, ICE Futures, india, intraday trade, Mumbai, new york, Pakistan, Philippines, raw sugar, Sucden, sugar-cane