Raw Sugar Demand From Indonesian Refiners Poised to Climb by 16%

(Businessweek) – Private refiners in Indonesia, the world’s largest sugar buyer, may import 16 percent more of the raw variety this year to meet rising consumption in the domestic food industry and as new processors start production.

Demand may reach 3 million tons, said Faiz Achmad, food industry director at the Industry Ministry. That compares with 2.58 million tons last year, according to data from the Indonesian Sugar Council. Total raw imports may rise about 6 percent to 3.6 million tons in the year through April, the U.S. Department of Agriculture estimates.

Sugar slumped 18 percent in New York this year, touching a three-year low yesterday, after a millers group forecast a record harvest in Thailand, the second-biggest exporter. The crop in India, the second-largest grower, will top demand after the best start to the monsoon in more than a decade, according to a Bloomberg survey. Consumption in Indonesia has surged 51 percent in the past decade to 5.1 million tons, spurred by demand from food and beverages, according to USDA data.

“Economic growth has led to an increase in demand,” Bachrul Chairi, director general of foreign trade at the Trade Ministry, said today in Jakarta. “Consumption for food and beverages is rising, therefore we need more imports.”

Southeast Asia’s largest economy grew 6.02 percent in the first three months of 2013 from a year ago, after expanding 6.11 percent in the previous quarter. National GDP rose at an average annual pace of 5.7 percent in the decade through 2012.

The government issued permits last week to import 585,000 tons of raw sugar, including 110,000 tons for three new refineries, Achmad said by phone yesterday. That brings the total amount allowed so far to 2.85 million tons, he said.

Raw sugar futures for delivery in October dropped 1 percent to 16 cents a pound on ICE Futures U.S. yesterday, after touching 15.93 cents, the lowest for a most-active contract since July 1, 2010.