Indian sugar futures fell on Friday on ample supplies due to surplus production for three straight years, though a slight pick-up in demand due to an upcoming festival limited the downside. The key December contract was down 0.17 percent at 2,870 rupees ($46.73) per 100 kg on the National Commodity and Derivatives Exchange at 0913 GMT. It fell to 2,850 rupees on October 21, its lowest level since June 13, 2012.
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. "Bulk buyers are not actively buying as there is a glut. They are maintaining lower inventory," said Prasoon Mathur, a senior analyst with brokerage Religare Commodities.
India will celebrate the Hindu festival of Diwali in the first week of November. Sugar demand from bulk consumers usually rises ahead of Diwali. Spot sugar was up 1 rupee at 2,878 rupees per 100 kg at the Kolhapur market in top producing Maharashtra state. A pick-up in exports can help mills in trimming inventory and can support prices, dealers said.
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. A dispute over sugarcane prices between Indian farmers and mills may curb sugar exports from the world's second-biggest producer, delay crushing in the new season and even trigger bankruptcies.
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