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India import policy talk drives up white sugar

LONDON - Talk that India could remove an import duty on white sugar again drove white sugar futures higher on Wednesday, while investor and trade buying pushed up cocoa in light volumes, dealers said.

Robusta and arabica coffee futures edged up in routine two-way investor dealings and rollover business.

In sugar, talk that India, the world’s biggest sugar consumer, could remove the import duty was the dominant talking-point in the market, triggering increased physical buying interest.

But analysts were sceptical that India would import physical white sugar imminently.

‘People who are short of the whites are covering their positions just in case (the market climbs further),’ said Jonathan Kingsman, managing director of Lausanne-based consultancy Kingsman SA.

‘Domestic prices (in India) are not that high, and we were surprised that a request (to remove duty) should be made now.’

He was referring to an Indian press report which, quoting a government official who asked not to be identified, said the election commission was considering a proposal from the government to remove the duty on refined sugar.

Talk of removal of the duty had driven up white sugar futures on Tuesday and was again the main driving factor on Wednesday, dealers said, as it signalled fresh Indian physical demand for white sugar.

India recently swung from net exporter to importer of sugar.

The benchmark whites-over-raws premium has risen to around $112 per tonne from $100 on Friday.

London May white sugar futures were up $6.7 or 1.7 percent at $391.90 per tonne in moderate volume of 1,218 lots at 1229 GMT, while ICE May raw sugar was up 0.14 cent at 12.73 cents per lb.

Some traders said that sugar had upward price potential as the market was still below its recent highs.

Cocoa futures rose, as dealers talked of trade and investor short-covering, as well as rollover business in nearby months.

Expectations of a good-sized mid-crop in main West African producers kept a lid on the upside, dealers said.

‘Trade and specs (buyers) are kicking around,’ one dealer said. ‘There is not much in terms of origin (selling) and industry (buying.)

ICE May cocoa was up $41 or 1.8 percent at $2,286 per tonne at 1230 GMT, while London May was up 24 pounds or 1.4 percent at 1,794 pounds per tonne.

Cocoa arrivals at ports in top grower Ivory Coast reached 828,000 tonnes by March 8, exporters estimated on Tuesday, compared with 1,023,527 tonnes in the same period of the previous season.

Robusta and arabica futures inched higher in routine two-way investor dealings in thin volumes, against a backdrop of increasing concern over the outlook for demand during a global economic downturn.

London May robustas were up $4 to $1,440 per tonne in low turnover of 1,068 lots at 1231 GMT, while May arabicas were up 0.65 cent at $1.0660 per lb.

Brazil’s coffee farmers are keeping a tight hold of their beans after a flurry of trade early in the year, with weak demand by foreign importers holding prices at levels too low to entice growers to sell.