Indian sugar futures rose on Friday on improvement in local demand due to a key festival and as mills signed deals to export raw sugar that could help in trimming the inventory. Indian traders have struck deals to export about 175,000 tonnes of raw sugar for December-January delivery, marking their first sale in the new season started on October 1
"Sentiments are changing due to export deals. Inventory can go down if mills sign a few more deals. Local demand is also rising due to Diwali," said Subhranil Dey, an analyst with SMC Comtrade. India started the new sugar marketing year with carry-forward stocks of 8.8 million tonnes. In addition, it is expected to produce 25 million tonnes this year, compared with a demand of 23 million tonnes.
The country will celebrate the Hindu festival of Diwali in the first week of November. Sugar demand from bulk consumers usually rises ahead of Diwali. The key November contract was up 0.21 percent at 2,897 rupees ($47.27) per 100 kg on the National Commodity and Derivatives Exchange at 0853 GMT. It fell to 2,876 rupees earlier this week, the lowest since June 19, 2012. Spot sugar edged up 2 rupees to 2,882 rupees per 100 kg at the Kolhapur market in the top producing Maharashtra state.
A jump in sugar refining capacity in Asia and Africa is set to help India boost exports of the raw variety and reduce the world's No 2 producer's bulging stocks. Struggling sugar mills in India are seeking solace in producing ethanol from crushing sugar cane, as the government ramps up pressure on oil retailers to cut fossil fuel imports by blending gasoline with the biofuel.
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