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As Raw Sugar Prices Fall, Jakarta Mulls Import Quota
Eko Listiyorini & Yoga Rusmana | April 28, 2011

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Indonesia, Southeast Asia’s largest sugar buyer, may set its import quota for the raw variety next week before the crushing season begins and diminishes domestic supplies, Trade Minister Mari Elka Pangestu said.

The Agriculture Ministry recommended imports of 209,000 tons by five producers, the trade minister said on Thursday. That would be in addition to the 50,000 tons of planned purchases by state plantation company Perkebunan Nusantara X.

Indonesia’s purchase plan may help arrest the decline in raw-sugar prices, which have fallen about 29 percent in New York this year on expectations that rising supplies from Brazil and Thailand, the top producers, will ease a global deficit.

The government typically allows raw-sugar imports only during the crushing season, which runs from the end of May until October, when there is a shortage of supplies to mills that refine raw product into white sugar.

The five producers that have submitted import requests are Industri Gula Nusantara, Laju Perdana Indah, Kebon Agung, Perkebunan Nusantara IX and Perkebunan Nusantara XI, Mari said. The government issued permits for 217,000 tons of imports last year.

July-delivery raw sugar fell 1.2 percent to close at 22.96 cents a pound on ICE Futures US in New York on Wednesday.

Indonesia needs to import processed sugar as demand outpaces domestic production. The government issued permits for six state-owned companies to import 450,000 tons of white sugar this year through April 15, but only about 85,000 tons were purchased as higher prices curbed demand, according to Bloomberg data.

The country produced about 2.3 million tons of white sugar last year, below the 2.5 million ton target, as a prolonged rainy season curbed cane output, Agus Hasanuddin Rachman, director of seasonal crops at the Agriculture Ministry, said via text message on Thursday.

Production may rise to 2.7 million tons this year on more favorable weather, he said. 

Bloomberg