Singapore, Oct 8 - India, after buying 350,000 tonnes of Brazilian raw sugar in its first big purchase in more than two years, is in talks to buy another 700,000-800,000 tonnes from Brazil and Thailand, a trade executive said on Wednesday.
After flooding the world market with plentiful exports in recent years, India has turned into a sugar importer as trade officials expect a sharp fall in output because of erratic weather in the main growing regions in its south and west.
"Sugar mills in the state of Andhra Pradesh have been the first ones to move and have recently started signing deals to import, as the crop in the southern region has collapsed," Madhav B. Shriram, director of leading sugar producer DCM Shriram Industries Ltd, told Reuters in an interview.
"Southern Indian mills have already signed deals to import about 350,000 tonnes of Brazilian raw sugar and coastal states are now in talks with Thailand and Brazil to import another 700,000-800,000 tonnes of raws," Shriram told Reuters on the sidelines of a biofuels and ethanol conference in Singapore.
The Indian crop woes in the world's second-biggest producer, after Brazil, might support world prices, although some analysts say overall depressed sentiment in commodity markets, thanks to worsening credit conditions, might prevent any price recovery.
ICE raw sugar futures dropped on investor selling in sympathy with the wider commodities complex, led by oil. The December contract fell 4 percent to 11.55 cents a lb by 0804 GMT.
The amount already contracted is for arrivals in November and December and the additional purchases being eyed by Indian traders are for shipments between November and March, Shriram added. He declined to give price details.
But Indian traders said most of the Brazilian deals were done around $340 a tonne free-on-board. And prices have fallen sharply since those Brazilian deals were signed.
For the year ending September 2008, India is estimated to have exported a record 4.8 million tonnes, against less than 2 million tonnes exported in the previous year, mainly due to exports of raw sugar to the Al Khaleej Sugar refinery in Dubai.
Industry officials expect India's sugar production in the crop year ending September 2009 to drop to about 20 million tonnes, from about 27 million tonnes in the previous year.
"It works out cheaper for mills in southern India to import raws and refine them, rather than moving from other parts within the country," Shriram said.
The southern Indian states together account for more than 20 percent of the country's total sugar production.