India Lifts Sugar Exports Ban as Production Rises

Mumbai: India, the world's second-biggest producer of sugar, lifted a six-month ban on exports of the sweetener as production heads for a record. A bumper sugar cane crop has helped inventories return to 'comfortable' levels, allowing shipments, Finance Minister Palaniappan Chidambaram said in New Delhi today. A resumption of exports from India may extend losses in global prices. Sugar, the best-performing commodity in 2005, declined in New York and London. A drop in oil prices, which makes ethanol processed from the crop less attractive as an alternative fuel, also contributed to the slide. 'Global sugar prices are not going anywhere in the short term,' said Atul Chaturvedi, president at Adani Enterprises Ltd., a commodities trader. That is 6 percent more than the 22.7 million tons estimated by the government in November.

'Falling oil prices, which directly influences ethanol, is already putting pressure on sugar.' Crude oil fell below $53 a barrel for the first time in 19 months after a report showed that U.S. fuel consumption plunged to the lowest since April 2004. Futures touched $52.94 earlier today in New York, the lowest since June 9, 2005. Prices are down 16 percent from a year ago. India's sugar output may rise to a record 24 million metric tons in the year to September, Agriculture Minister Sharad Pawar said on 5th January.

-Bloomberg