Indian sugar futures extended losses on Thursday to hit their lowest in a month after the government made available higher supplies for October and November in an attempt to keep prices lower during key festivals. 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 key November contract on India's National Commodity and Derivatives Exchange was down 0.23 percent at 3,465 rupees ($64.74) per 100 kg at 1006 GMT, after falling to 3,447 rupees earlier in the day. "The quota is more than demand. Carry-forward stocks will remain from the October-November quota for December," said Ashok Jain, president of the Bombay Sugar Merchants Association.
A majority of Indians will celebrate Dussehra in October and Diwali in November. Sugar consumption usually rises during this period. In the Kolhapur spot market in Maharashtra, sugar eased by 10 rupees to 3,630 rupees per 100 kg. Indian mills have signed deals to buy up to 450,000 tonnes of Brazilian raw sugar for delivery from October to December as the gap between domestic and overseas prices widens, making room for the first imports in more than two years. Sugar inventory on October 1, when the new 2012/13 season begins, is estimated to be 6 million tonnes, up from 5.5 million tonnes a year earlier, said the Indian Sugar Mills Association, a producers' body.
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