Raw Sugar prices where in an all-time-high, soaring up to almost 5 percent after it sunk from an 11-month low. This was because of the long-awaited news that the Indian government approved the duty-free import of 500,000 tons of sugar.
May raw sugar futures in New York was up by as high as 16.95 cents per pound, and was trading up by 3.2. Percent compared to its previous close that was 16.67 cents per pound, just before 8am in the New York while white sugar futures in London were up by 2.0% and was being sold for $473.50 a ton.
Indian imports, were seen as an inevitable and a cut to the 40% tariff rate was necessary in order to prevent soaring prices.
But up until now the Indian government has been hesitant to take such a move, choosing instead to control prices through a combination of relentless upbeat production forecasts, and a talk of sharp drop in consumption. The government imposes taxes on Soft Drink and reduction in of consumer subsidies.
The duty-free allowance of 500,000 tons is below what should be needed in order to make up for the lack in production. But this may be just the first in numerous batch of tariff free production.
MarexSpectron, a leading global commodities broker, noted that an additional pressing reason for the government action was the fact that "the outlook for the 2018-19 crop is deteriorating slightly in the absence of pre-monsoon rains in the Deccan," which could lead to a deficit in the coming year.