Indian sugar steady as cold weather dampens demand

(Reuters) – Indian sugar futures were steady on Tuesday as demand remained subdued due to a drop in temperatures amid hopes that the government would provide incentives to mills to produce raw sugar.

At 0950 GMT, the key February contract was up 0.11 percent at 2,792 rupees ($45.06) per 100 kg on the National Commodity and Derivatives Exchange.

“Prices will remain range bound in the next few weeks as demand is going down due to falling temperature,” said Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association.

“Supplies are ample. Prices won’t rise unless mills manage to export significant amount of sugar.”

Temperature has fallen below normal level in most 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 up 3 rupees at 2,853 rupees per 100 kg at the Kolhapur market in Maharashtra.

The government is likely to announce incentives for raw sugar production this week, dealers said.

The federal cabinet approved a scheme of interest-free loans to sugar mills, Food Minister K.V. Thomas said earlier this month, as part of a bail-out package for beleaguered mills.

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.