Indian sugar extends losses on sluggish demand, stocks

November 26th, 2013

By:

Category: Sugar

(Reuters) – Indian sugar futures extended the previous session’s losses on Tuesday due to higher carry forward stocks and subdued demand, though a delay in cane crushing and expectations of an increase in import duty limited the downside.

The key December contract was down 0.74 percent at 2,836 rupees ($45.40) per 100 kg on the National Commodity and Derivatives Exchange at 0923 GMT. It fell to 2,801 rupees last week, its lowest since June 8, 2012.

“Sugar prices will remain under pressure unless the government intervenes in the market,” said a Mumbai-based dealer.

“Carry forward stocks are ample and once crushing starts, the inventory will rise further. Demand is likely to remain weak due to the winter season,” he said.

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

Sugar cane crushing normally starts in the first week of November in Maharashtra and Uttar Pradesh, the country’s top two producing states. But this year it has been delayed as farmers and mills could not reach an agreement over the cane price.

Most sugar mills in India are likely to remain idle until the first week of December – extending a delay in the start of crushing – after the government refused to be drawn into a price dispute.

India started the new sugar marketing year with carry-forward stocks of 8.8 million tonnes. It is expected to produce 25 million tonnes this year against a demand of 23 million tonnes.

Spot sugar edged up 3 rupees to 2,895 rupees per 100 kg at the Kolhapur market in Maharashtra. ($1 = 62.4650 Indian rupees)

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