India sugar hits 3-week low on subdued demand, rising supply

January 7th, 2014

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Category: Sugar

(Reuters) – Indian sugar futures fell on Tuesday to their lowest in nearly three weeks on mounting supplies, and sluggish demand due to the winter season.

At 0838 GMT, the key February contract was down 0.22 percent at 2,759 rupees ($44.25) per 100 kg on the National Commodity and Derivatives Exchange, after falling to 2,753 rupees earlier in the day, the lowest level since Dec. 19.

“Sugar mills are consistently reducing prices to sell quickly as much as they can. They need money for cane payments,” said a Mumbai-based dealer.

Mills usually pay farmers a large chunk of the cane price immediately after harvest or within two weeks. The crushing season has started and mills are buying cane from farmers.

Temperature has fallen below normal in many parts of the country, the weather department said on Tuesday.

Demand for sugar from bulk consumers like ice-cream and cold-drink makers usually drops during the winter.

Spot sugar was down 2 rupees at 2,836 rupees per 100 kg at the Kolhapur market in Maharashtra.

The government was expected to announce sops for raw sugar production last week, but has postponed it to Jan. 16, dealers said.

India could soon boost exports of raw sugar at the expense of top suppliers Brazil and Thailand as the government looks likely to give cash-strapped mills financial help for production so they can pay farmers.  ($1 = 62.3450 Indian rupees)

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