Indian sugar futures rose to the highest level in a week on Friday on an expected rise in demand during the festivals, a delay in cane crushing and on the back of rising overseas prices. New York raw sugar futures jumped more than 1 percent as markets reacted positively to the Federal Reserve's aggressive new stimulus plan for the US economy.
The key October contract on India's National Commodity and Derivatives Exchange was up 1.32 percent at 3,597 rupees ($66.2) per 100 kg by 1036 GMT, after rising to 3,598 rupees earlier in the day. "Demand is expected to remain firm during next two months due to festivals. Stocks are sufficient, but traders are expecting supplies from new season to get delayed," said Vedika Narvekar, a senior analyst with Angel Commodities Broking.
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. The western state of Maharashtra, the country's top sugar producer, has decided to start crushing for the 2012/13 season from November 1, instead of October 1, as cane has not developed well due to water shortage.
In the Kolhapur spot market in Maharashtra, sugar edged up 2 rupees to 3,584 rupees per 100 kg. India's sugar output in 2012/13 is expected to fall to 24 million tonnes, from an earlier estimate of 25 million tonnes, the Indian Sugar Mills' Association (ISMA) said on Monday. India, the world's largest consumer of sugar, is likely to become a net importer of the sweetener as early as 2013/14, as drought-hit farmers replace cane with less water-intensive crops.