Indian sugar extends losses to hit two-year low

(Reuters) – Indian sugar futures fell for a third straight day on Wednesday to hit their lowest in more than two years as supplies were rising due to the ongoing cane crushing amid weak demand from bulk consumers.

India started the new sugar marketing year on Oct. 1 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.

At 1027 GMT, the key January contract on the National Commodity and Derivatives Exchange was down 0.61 percent at 2,780 rupees per 100 kg, the lowest level since Nov. 8, 2011.

“Demand has been weak. Supplies are rising from ongoing crushing, though mills are struggling to sell last year’s stocks,” said Ashwini Bansod, a senior analyst at Phillip Commodities India Pvt Ltd.

“Prices will remain under pressure as exports are not viable due to the drop in overseas prices.”

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

Most sugar mills in India have started crushing after a delay of nearly a month due to a dispute with farmers over cane price, but the delay is unlikely to trim the production of the sweetener, a senior industry official said.

Spot sugar nudged a rupee up to 2,877 rupees per 100 kg at the Kolhapur market in Maharashtra.

Food Minister K.V. Thomas said last week the government would consider all possible measures to assist sugar mills.

Traders say the government can increase import duty or provide subsidy for exports to arrest falling sugar prices.