Indian sugar futures were steady on Wednesday as the government's pressure on mills to sell the entire allocated quota for October and November negated a likely rise in demand ahead of 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 recent directives from the government are putting pressure on mills to sell sugar. It will lead to higher supplies in the coming days," said a Mumbai-based dealer.
"Any action on the part of the sugar mills which is contrary to the spirit of the release order would be dealt with swiftly and strongly," the government said in a statement on Wednesday. The government also said unsold non-levy stocks would be converted into levy stocks. Levy sugar is the quantity that mills sell at subsidised rates to the government for use in the public distribution system. By 1019 GMT, the key November contract on the National Commodity and Derivatives Exchange was unchanged at 3,341 rupees ($63.08)per 100 kg. At the Kolhapur spot market in the state of Maharashtra, sugar edged down 5 rupees to 3,545 rupees per 100 kg.