Indian sugar steady; mills under pressure to cut prices

October 10th, 2013

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Category: Sugar

(Reuters) – Indian sugar futures were treading water on Thursday near their lowest in nearly 16 months as improving demand due to festivals offset concerns that mills may sell the sweetener aggressively to bring down inventory and to make payments for cane.

* India’s carry-forward stocks of sugar on Oct. 1 are estimated at 8 million tonnes, up from 6.2 million tonnes a year earlier.

* The key November contract was up 0.03 percent at 2,889 rupees ($46.66) per 100 kg on the National Commodity and Derivatives Exchange at 0759 GMT. It fell to 2,882 rupees in the previous session, the lowest level since June 18, 2012.

* “There is concern that sugar mills in Uttar Pradesh may sell at a discount to the current price. They want to trim inventory before Diwali and pay farmers’ dues,” said Ashwini Bansod, a senior analyst at Phillip Commodities India Pvt Ltd.

* Sugar mills in Uttar Pradesh, the country’s second biggest sugar producer, owes cane farmers nearly 24 billion rupees for the previous crushing season that ended on Sept. 30, according to industry estimates.

* As banks are not providing additional loans, the only option for mills is to sell sugar to raise cash, one dealer said.

* India will celebrate the Hindu festivals of Dussehra in the third week of October and Diwali in the first week of November. Sugar demand usually rises during this period.

* Spot sugar dropped 27 rupees to 2,919 rupees per 100 kg at the Kolhapur market in top producing Maharashtra state.

* India’s sugar output is expected to be 25 million tonnes in the new season that started on Oct. 1, higher than the estimated demand of 23 million tonnes per annum, said a leading industry body.

* A jump in sugar refining capacity in Asia and Africa is set to help India boost exports of the raw variety and reduce the world’s No. 2 producer’s bulging stocks.

* India could export as much as 3 million tonnes of sugar in 2013/14 to get rid of excess supply, capitalising on rising demand from Southeast Asia, the Middle East and Africa. ($1 = 61.9100 Indian rupees)

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