Indian sugar futures eased for a second session on Wednesday as improved rains in cane growing areas buoyed the crop's prospects amid lacklustre demand in the spot markets, though traders expect prices to recover soon on account of festivals. "Demand is still weak in spot markets but is likely to rise as the festival season is approaching. We don't expect a further decline, prices could recover from the next session," said Prasoon Mathur, a senior analyst with Religare Commodities.
Indians celebrate the Ganesh festival this month, which will be followed by Dussehra in October and Diwali in November. Sugar consumption usually rises during the festival period as sweets are a common treat and families gather for special meals. The key October contract on the National Commodity and Derivatives Exchange was down 0.76 percent at 3,532 rupees ($63.78) per 100 kg at 1113 GMT. In the Kolhapur spot market in top-producing Maharashtra state, sugar fell 7 rupees to 3,585 rupees per 100 kg.
Sugar cane producing regions of Maharashtra received heavy rains in the last three days, which will boost crop prospects and so weigh on prices, said a dealer based in the Vashi spot market near Mumbai. India's sugar output in 2012/13 is expected to fall to 24 million tonnes, down from an earlier estimate but outstripping domestic demand of about 22 million tonnes, Indian Sugar Mills' Association (ISMA) said on Monday.