Traders and analysts said India has contracted for 1.1 million tonnes of raw sugar in the new season that began in October and would be looking for similar volumes in the first half of 2005 because of weak domestic output.
"There is an immediate demand for more than 50,000 tonnes of raw sugar from the mills if the prices go down," said a senior official with a New Delhi-based sugar-trading firm.
He said prices of raw sugar were hovering at around $265 a tonne, including cost and freight, while traders were looking at price levels of $250 to enter the market.
"I think at this level, there will be very few mills coming forward to buy, Indian purchases in January were at $240 levels."
Traders discounted chances of India buying whites, which carry a heavy 60 percent customs duty.
"Neither the government nor mills will be interested in white sugar imports going by past experience when the country was flooded with sugar three years ago," said one trader.
India had a dismal sugar harvest in the last crop year and is expecting another poor sugar crop this year because of a drought in some key cane-growing states.
The country had stocks of 8.5 million tonnes of sugar at the beginning of the season in October and output this crop year was expected to be around 12.5 million tonnes. India annually consumes about 18 million tonnes of sugar.
"Stocks are only on the register and not in the warehouses of mills," said G. Chandrasekhar, commodities editor of the Hindu Business Line newspaper. "So there is a serious shortage and I expect sugar prices to remain firm and consumption to grow with a high GDP growth."
In neighbouring Pakistan, the government plans to import 250,000 tonnes of raw sugar to cover supply shortfalls. The central bank has permitted five traders to import, but no deals have been finalised yet.
"There are rumours in the market that a couple of traders have struck deals with some Brazilian suppliers. But in reality nothing has happened," said Abdul Majeed, a Karachi-based trader.
"We all are waiting for a deal to finalise, so others can also pursue. The market thinks that a few traders could import 40,000 to 70,000 tonnes in a week or so," he added.
Pakistan's sugar production is expected to decline in the new season beginning in November to 3.3-3.4 million tonnes from 4.0 million tonnes in the previous year.
Pakistan annually consumes 3.6 million tonnes of sugar. It last imported sugar in 2001 and was an exporter in 2003.
Traders in Bangkok said Bangladesh had bought at least 20,000 tonnes of white sugar from Thailand so far this year, with two vessels due to load the commodity this week.
"Millers are now talking about the crop at between 48- and 50 million tonnes," said Buntline Ketosis, a director at the Thai Cane and Sugar Board. The Agriculture Ministry and the Industry Ministry's Thai Cane and Sugar Board estimated the cane crop at 60.86 million tonnes, down from 64.48 million tonnes in the previous crop due to drought.
Cargill, the US trading house, cut its estimate by 2 million tonnes to 52 million tonnes over the past week. Traders said that Taiwanese importers have been seeking to buy sugar from Thailand.
"Apart from Taiwan, we have not heard of any fresh demand from India or Indonesia, not yet," said one trader.
In China, refined sugar prices are about $36.25 a tonne below the cost of imported refined sugar, and few buyers are active in the international market.
But domestic prices are inching up ahead of the Lunar New Year, and importers are expected to come back once the domestic crushing season ends in April, Shanghai-based traders said.
China's sugar output could reach 10.5 million tonnes in this year's marketing season, according to the China Sugar Association.
But with rising incomes, consumption could be as high as 12 million tonnes, compared with a record 11 million tonne in 2004, imports could meet or exceed the 1.2 million tonnes purchased last year.