Indian sugar futures edged higher on Friday on bargain buying after hitting a two-month low in the previous session, though subdued demand due to the winter season and rising supplies weighed on sentiments. As of 0906 GMT, the January contract on India's National Commodity and Derivatives Exchange was up 0.28 percent at 3,266 Indian rupees ($59.21) per 100 kg, after hitting a low of 3,245 rupees in the previous session.
"Futures are trading at a discount to spot markets. That's why bargain buying is emerging," said a senior analyst with JRG Wealth Management. "But in medium term, fundamentals are bearish. Demand is not picking up. Supplies are continuously rising."
Demand for sugar from bulk consumers like cold drink and ice cream makers usually drops in India during the winter season. Sugar fell by 16 rupees to 3,294 rupees per 100 kg at the Kolhapur spot market in the top-producing Maharashtra state. Indian sugar mills produced 4.9 million tonnes between October 1 and December 15, up 2 percent from a year earlier. The International Sugar Organisation raised its forecast for a projected global sugar surplus in 2012/13 to 6.18 million tonnes, raw value, and said prices could remain under bearish pressure until the end of the current crop cycle.