Indian sugar futures fell on Monday, weighed by huge supplies and relatively weak demand by bulk buyers such as ice cream and soft drink makers. The contract fell despite some recovery in global sugar prices which dipped on Thursday to 16.56 cents, the lowest level for the front month since July 2010. A forecast for a smaller surplus lent support to global prices.
A global sugar surplus of 4.591 million tonnes is expected in 2013/14, about 27 percent less than previously forecast due to higher demand and lower output in some key producers, analyst Jonathan Kingsman said early in the session. "We are staring at huge stockpile of sugar," said a Mumbai-based dealer. "Natural, a modest demand wouldn't help and prices will remain lower in the near term," he said.
Demand for sugar from ice cream and beverage makers typically rises during the summer. The key June contract on the National Commodity and Derivatives Exchange was down 0.1 percent at 3,017 rupees per 100 kg at 1053 GMT. There are concerns that sugar output in the top-producing Maharashtra state may fall sharply due to drought.
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 was at 3,054.85 rupees per 100 kg at the Kolhapur market in the top-producing Maharashtra state. Farmers have planted cane on 4.07 million hectares as of May 17, compared with 4.57 million hectares during the same period a year earlier, agriculture ministry data showed. India is likely to produce 24.6 million tonnes of sugar in 2012-13, an industry body has said, against an annual demand of about 23 million tonnes.
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