Raw and refined sugar may rise this week as dollar strengthens

Raw-sugar futures and refined-sugar contracts may rise this week as the dollar strengthens.

Seven out of 11 traders, analysts and brokers surveyed last week forecast that raw sugar traded in New York would rise and four predicted a drop. Raw sugar gained 0.6 per cent to 26.33 cents a pound last week.

Eight of 11 respondents said white sugar traded in London would gain and three said the price would drop. White, or refined, sugar climbed 4.6 per cent to $736 a metric tonne last week. Six of 11 said refined sugarís premium over raw sweetener would widen, four said it would narrow and one said the gap would be little changed.

Meanwhile, white sugar output in Indonesia, Southeast Asia's biggest buyer of the commodity, may rise by a less-than-expected nine per cent this year, said State Enterprises Minister Mustafa Abubakar.

Production may rise to 2.77 million metric tonnes this year from 2.55 million in 2009, Abubakar told reporters in Jakarta yesterday, without giving a reason for the revised target. The forecast was below previous estimates by the agriculture ministry on December 31 of 2.99 million tonnes in 2010.

State-owned sugar mills may produce 1.77 million tons or 64 per cent of total output for this year, said Abubakar.

Falling supplies from local producers may force Indonesia to rely on imports for the second year to meet public consumptions, increasing global deficit.

The country has so far bought 410,500 tonnes of white sugar out of quota for 500,000 tonnes, said Diah Maulida, Director-General of foreign trade at the trade ministry, on February 9.

Indonesia plans to build 20 new sugar mills in the next four years in a bid to increase production and cut imports, Abubakar said. "By 2014, sugar demand will be fulfilled domestically."

The country is targeting output of 4.1 million tons by 2014, with demand projected at 4.08 million tonnes,said Faruk Bakrie, Chairman of the Indonesia Sugar Association, on February 3.

White sugar more than doubled last year as erratic weather hurt crops in Brazil and India, the biggest producers.

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