MUMBAI: Indian sugar futures fell on Thursday to their lowest level in nearly two months on sluggish demand and rising supplies as cane crushing gained momentum in all producing states.
As of 0916 GMT, the January contract on India’s National Commodity and Derivatives Exchange was down 0.46 per cent at 3,254 rupees ($59.60) per 100 kg, after falling to 3,245 rupees, the lowest level for the second month contract since Oct. 25.
“Supplies pressure is building up due to ongoing cane crushing, but demand is not improving,” said Subhranil Dey, an analyst with SMC Comtrade.
Demand for the sweetener from bulk consumers like cold drink and ice cream makers usually drops in India during the winter season.
“Mills need money for purchasing cane from farmers, but sales are not picking up. Some mills have started slashing prices,” Dey said.
Mills usually pay farmers a large chunk of the cane price immediately after harvest or within two weeks.
Sugar was steady at 3,307 rupees per 100 kg at the Kolhapur spot market in the top-producing Maharashtra state.
Indian sugar mills produced 4.9 million tonnes of the sweetener between Oct. 1 and Dec. 15, up 2 per cent from a year earlier.
India is expected to decide on raising the import duty on the sweetener in a fortnight, Food Minister K.V. Thomas said last week, as lower prices in the world market made room for such imports in the past two months.
The International Sugar Organization raised its forecast for a projected global sugar surplus in 2012/13 to 6.18 million tonnes, raw value, and said prices could remain under bearish pressure until the end of the current crop cycle.
Pakistan has allowed another 500,000 tonnes of sugar exports, bringing the total to 1.2 million so far this year, as it seeks to generate foreign exchange for state coffers and revenue for cash-strapped mills.