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Sugar Extends Slump to Eight-Month Low on Rising India Output

23 March 2010 (Bloomberg) By Debarati Roy

Sugar plunged for a third session, extending its slide to an eight-month low, on mounting concern that rising output from India will erase a global production deficit that helped send prices to a 29-year high last month.

Production in India, the world's largest consumer of the sweetener, jumped 14 percent in the season that began Oct. 1 as late rains improved cane yields in the biggest growing regions, said Vinay Kumar, managing director of the National Federation of Cooperative Sugar Factories Ltd. Before today, prices in New York fell 41 percent from a high of 30.4 cents a pound Feb. 1.

"The supply situation has improved considerably," said Jimmy Tintle, an analyst at Transworld Futures in Tampa, Florida. "Sugar will remain range-bound in the next few sessions."

Sugar futures for May delivery declined 0.42 cent, or 2.4 percent, to 17.42 cents at 9:26 a.m. on ICE Futures U.S. in New York. A close at that price would mark an 8.5 percent drop over three sessions. Earlier, the most-active contract touched 17.19 cents, the lowest price since July 13.

Supplies will exceed demand starting in April as production surges in Brazil, the world's largest grower, according to Fortis Bank Nederland NV and VM Group. The surplus will be 190,000 metric tons in the second quarter and 2.98 million tons in the third quarter, Fortis and London-based researcher VM said today in a report. India is the world's second-largest producer.

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