Indian sugar futures extended losses on Thursday on profit-taking driven by ample supplies and expectations that a sharp drop in overseas prices may lead to higher imports. An improvement in demand from bulk buyers due to the summer season and concerns over output in 2013/14 limited the downside.
The key June contract on the National Commodity and Derivatives Exchange was down 0.55 percent at 3,060 rupees ($55.07) per 100 kg at 0815 GMT, after rising to 3,104 rupees earlier this week, the highest level since March 13. "Sugar prices in the world market are continuously falling. Sugar refiners may import more quantity in the coming months. There is good refining margin at today's price," said a Mumbai-based dealer.
"I don't think local prices will fall below 3,000 rupees. Bulk consumers are quite active in spot market," the dealer said. New York raw sugar futures sank to an almost three-year low on Wednesday under pressure from the stronger US dollar, expectations of ample supplies as the cane crush in top producer Brazil sped up, dealers said.
Demand for sugar from ice cream and beverage makers typically rises during the summer. Concerns that sugar output in the top-producing Maharashtra state may fall sharply due to drought also limited the downside, dealers said. Sugar cane is a perennial, water-intensive crop and is usually harvested 10 to 16 months after planting. Cane for the crushing season starting October 1 has been planted, but half the total acreage is short of water. Spot sugar dropped 14 rupees to 3,068 rupees per 100 kg at the Kolhapur market in the top-producing Maharashtra state.
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