Indian sugar hits 1-1/2 year low on glut, tepid demand

Published: 13th November 2013 01:39 PM  |   Last Updated: 13th November 2013 01:39 PM   |  A+A-

Indian sugar futures dropped on Wednesday to their lowest in nearly one-and-a-half years on ample supplies amid a softening in demand due to the winter season.

The key December contract was down 0.60 percent at 2,811 rupees ($44.17) per 100 kg on the National Commodity and Derivatives Exchange at 0741 GMT. It fell to 2,807 rupees earlier in the day, its lowest since June 9, 2012.

"The market is still oversupplied. In the coming weeks, demand will soften further due to the winter season," said Ashwini Bansod, a senior analyst at Phillip Commodities India Pvt Ltd.

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

The delay in cane crushing is not enough to arrest falling prices due to ample carry-forward stocks, Bansod said.

Sugar cane crushing normally starts in the first week of November in Maharashtra and Uttar Pradesh, the country's top two producing states, but this year it has been delayed as farmers and mills couldn't agree over cane price.

The dispute over sugar cane prices between Indian farmers and mills may curb sugar exports from the world's second-biggest producer, delay crushing in the new season and even trigger bankruptcies.

India started the new sugar marketing year 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.

 Spot sugar edged up 5 rupees to 2,880 rupees per 100 kg at the Kolhapur market in Maharashtra.

A drop in overseas sugar prices was also weighing on sentiment, dealers said. New York raw sugar futures slipped 0.10 cent, or 0.6 percent on Tuesday, to finish at 17.87 cents a lb after touching a six-week low of 17.84 cents. ($1 = 63.6375 Indian rupees)


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