Indian sugar futures extended losses on Friday to hit their lowest in three months on weak demand and higher quota, as supplies from imports hurt the sentiments further. By 1040 GMT, the key November contract on the National Commodity and Derivatives Exchange was down 1.20 percent at 3,286 rupees ($60.85)per 100 kg, after falling to 3,285 rupees earlier in the day, the lowest level since July 20.
At the Kolhapur spot market, in the top sugar producing Maharashtra state, sugar dropped 25 rupees to 3,500 rupees per 100 kg. "Retail demand is not improving as per expectations. Mills slashed price by 50 rupees (per 100 kg) in tenders," said Harakhchand Vora, vice-president of the Bombay Sugar Merchants Association.
The government has allowed millers to sell 4 million tonnes of non-levy sugar in October and November, higher than the average monthly allocation of around 1.7 million tonnes. Non-levy, or free-sale, sugar is sold by millers in the open market, but the quantity each mill can sell is fixed by the federal government. The government on Wednesday said mills should sell the entire allocated non-levy quota before November 30 and the unsold stocks would be converted into levy sugar. Levy sugar is the quantity that mills sell at subsidised rates to the government for the public distribution system.
Indians will celebrate Dussehra next week and Diwali in November. Demand for sugar rises during these festivals. The country's biggest sugar refiner Shree Renuka has started selling imported sugar from its Haldia refinery. India's sugar output in the 2012/13 year, which started on October 1, is likely to fall to 23.5 million to 24 million tonnes, from 26 million tonnes a year earlier.
Sources from: Reuters 2012
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