India's sugar refiners and mills are seen importing only half of the duty-free quota

Indian sugar refiners and mills will likely import less than half of the 1,000,000 metric tons (or 500,000 metric tonnes) of?raw sugar that the government has permitted duty-free. This is because falling domestic sugar prices have reduced the profitability for imports.

Last week, the world's largest sugar consumer allowed duty-free imported until October 31, to ease record high prices before the festival season when demand for sweets is typically at its peak.

Domestic ex-mill prices are down?nearly 20 % from their record highs last week.

Imports were attractive when prices were rising and firm last week. The sharp drop in prices since the announcement of the price cut has made imports less attractive for millers, said Rahil Shaikh, managing director at Mumbai-based MEIR Commodities India.

Shaikh stated that the import margin was thin and that there is no guarantee they will be maintained when the shipments arrive in two months.

Shaikh and four others at global trading houses said that imports were unlikely to exceed 500,000 tons. The majority of this volume is likely to be consumed by refineries.

DOMESTIC SUPPLIES TO SOAR FROM MID-OCTOBER

India has a few sugar refineries located at ports that import sugar raw duty-free to refine and then export the white sugar.

Last week, the government allowed refiners to request an import quota. This enables them to sell refined sweetener?made with raw sugar imported already in the country's market until October 31.

Mumbai-based dealer of a global trading firm who declined to be identified in accordance with the company's policy said that these refineries can quickly sell 300,000 tonnes of stock they hold in the domestic market.

He said that mills were not interested in importing because domestic supplies would increase from mid-October, with the beginning of the new crushing season. This could put further pressure on the local price.

India has asked mills to start sugarcane crushing earlier, on October 15, to increase supplies.

New Delhi allows only the import of raw sugar. This is likely to come mainly from Brazil, a top producer. It must then be processed and sold on the local market.

The Mumbai-based dealer said that it is important to import white sugar alongside raw sugar in order to boost supply quickly. (Reporting and editing by Jan Harvey; Rajendra Jadhav)

(source: Reuters)