Sugar steady as festive demand improves

MUMBAI: Sugar futures were treading water on Thursday as a slight improvement in spot demand due to a festival offset higher carry-forward stocks and forecasts of bumper production.

The key December contract was unchanged Rs 2,887 ($46.87) per 100 kg on the National Commodity and Derivatives Exchange at 0831 GMT. It fell to Rs 2,850 on October 21, the lowest level since June 13, 2012.

"Demand from bulk consumers has increased due to Diwali, but supplies have also risen. In fact, the market is oversupplied. Mills are competing among themselves to sell stocks," said a dealer from the Vashi market near Mumbai.

India will celebrate the Hindu festival of Diwali in the first week of November. Sugar demand from bulk consumers usually rises ahead of Diwali.

Spot sugar was up Rs 9 at Rs 2,878 per 100 kg at the Kolhapur market in the top producing Maharashtra state.

India started the new sugar marketing year with carry-forward stocks of 8.8 million tonnes. In addition, it is expected to produce 25 million tonnes this year, compared with a demand of 23 million tonnes.

A pick-up in exports can help mills in trimming inventory and can support prices, dealers said. Traders have struck deals to export about 175,000 tonnes of raw sugar for December-January delivery, marking their first sale in the new season started on October 1.