White Sugar Drops Most in a Year on Exports from Europe.

LONDON: Sugar extended declines in New York on Friday and fell the most in a year in London after the European Union announced plans to expand exports and India forecast a surplus.

The EU will allow an extra 3,50,000 tonne sugar exports in the 12 months ending in September, raising the limit for out-of-quota shipments to 1 million tonne, the European Commission, the EU’s executive arm, said Thursday. Raw sugar futures fell 9% on Thursday after the EU’s announcement. India may have a sugar surplus of 3.5 million tonne this season, Union agriculture minister Sharad Pawar had said.

“The markets are falling on panic liquidation,” said Jonathan Kingsman, managing director of Lausanne, Switzerland- based sugar broker Kingsman.

Raw sugar for March delivery dropped 1.68 cents, or 5.7%, to 27.98 cents a pound at 8:25 am on ICE Futures US in New York. Thursday’s drop was the biggest in two years. White, or refined, sugar for March delivery fell as much as $93.60, or 12%, to $675 a tonne on NYSE Liffe, the biggest drop since April 16, 2009. It was most recently down 7.8% at $715.50 a tonne.

Sugar prices in London only Thursday climbed to the highest since 1989 after crops were damaged by weather in Brazil, Russia, Thailand and Pakistan. Supplies have lagged demand for two years and this year the balance “remains fragile,” London-based C. Czarnikow Sugar Futures said in a report this week. The global sugar surplus is estimated at 3.22 million tonne by the International Sugar Organisation.

Higher prices on the world market compared to the domestic market may have been the impetus for the increased export quota, Fabienne Pointier, an analyst at Kingsman, said earlier.

The EU’s reference price is e404.40 ($554.23) a tonne, said Sergey Gudoshnikov, an economist at the International Sugar Organisation in London. The reference price is the basis for negotiations with importers and the sale of so-called intervention stocks.

The WTO in 2005 limited EU exports of subsidised sugar to 1.37 million tonne after a complaint by Brazil, Australia and Thailand. The commission on November 5, 2009, raised the volume of sugar eligible for export in the current season to 1.35 million tonne from 6,50,000 tonne in response to rising production. Brazil’s Unica sugar industry association didn’t immediately respond to e-mails from Bloomberg News seeking comment.

The EU will also lift the duty of e98 a tonne on most-favoured-nation imports of raw cane sugar from December 1 through next August, the commission said. “High world market prices for sugar currently make the cost of these imports prohibitive, which risks disrupting supplies on the European sugar market,” the commission said. “In this kind of situation, the commission is empowered to act.”

Source : economictimes.indiatimes.com