Indian sugar futures climbed on Monday as crude oil headed towards a record $143 a barrel, triggering hopes for more demand for cane-based biofuel ethanol. Traders said the oil rally sparked hectic short-covering after sugar prices had fallen nearly 2 percent last week.
At 2:45 pm (0915 GMT), the July contract on the National Commodity and Derivatives Exchange was up 0.35 percent at 1,433 rupees ($33.3) per 100 kg, while the August contract rose 0.54 percent to 1,482. Crude oil prices were trading up 1.66 percent at $142.54 at 0917 GMT. Spot prices in the northern state of Uttar Pradesh, the country's second-largest producer, edged up 0.16 percent at 1,552.50 rupees.
Traders said the market could come off if the government announced a larger sale quota for the September quarter. The sugar trade in India is controlled by the government, which sets the limit that millers can sell in the open market. In the June quarter the quota was 4.4 million tonnes.
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