Weekly prices for unrefined sugar, NYBOT (click to enlarge). Source: Commodity Charts & Quotes.
In May, ethanol prices in Brazil recorded their lowest level in 2 years, making the government consider an increase in the blending rate by 2% (from 23 to 25%). At the same time, crude oil prices have risen to new records. The advantage of sugar cane based ethanol has never been this great (earlier post). Meanwhile India's millions of sugar farmers are in crisis, battling falling prices because of an unprecedented output - production is likely to reach a record 28 million tonnes in the year to September 2007. And 30 million tons is projected for the 2008 season. The Indian sugar industry - the world's second-largest producer - demanded the government to implement a switch to ethanol, in order to slow down the price drops (earlier post).
Now, sugar futures in New York, where the product is traded in its raw form, fell on speculation that India may offer to sell unrefined supplies of the sweetener, adding to the global surplus.
Investors and traders expect India to issue a tender on July 23 for up to 265,000 metric tons of raw sugar, according to a report published on July 19 by BNP Paribas Commodity Futures Inc. in New York. Until recently, India only exported white, refined sugar. The record crop in India may lead the country to double total exports, a minister said last week.
Sugar futures for October delivery fell 0.02 cent, or 0.2 percent, to 10.30 cents a pound at 12:43 p.m. (July 20) on the New York Board of Trade. Futures are down 33 percent in the past year on rising global production.
Indian sugar output may rise 7 percent to a record 30 million tons in the year ending Sept. 30, 2008, from an estimated 28 million tons this year, according to the National Federation of Cooperative Sugar Factories Ltd., a producer group. India may double exports to 3 million tons in 2008, Akilesh Prasad Singh, the minister for agriculture, consumer affairs, food and public distribution, said on July 9 [entry ends here].