Indian sugar steady as bargain-buying offsets supply

(Reuters) – Indian sugar futures were steady on Friday after hitting their lowest in more than 27 months in the previous session as bargain-buying offset losses in overseas markets and ample supplies.

At 0908 GMT, the key February contract was down 0.11 percent at 2,723 rupees ($43.87) per 100 kg on the National Commodity and Derivatives Exchange, after falling to 2,706 rupees on Thursday, the lowest level since Sept. 29, 2011.

“Bargain-buying capped the downside for the time being, but fundamentals are quite bearish. The rupee is strengthening and raw sugar prices are falling in the world market. Exports are not possible at the current level,” said a Mumbai-based dealer.

New York raw sugar futures prices dropped to a 3-1/2 year low on Thursday in their biggest two-day rout since September, extending a long-term downtrend on chart-based selling, currency pressure, and excess supplies.

The rupee rose on Friday. A stronger rupee trims exporters’ returns.

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

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

Indian mills usually pay farmers a large chunk of the cane price immediately after harvest or within two weeks. As demand is weak, some mills are making distress sale in the market to make cane payments, dealers said.

Spot sugar was up 1 rupee at 2,810 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.