Indian sugar futures were treading water on Monday as ample supplies outweighed an improvement in demand from bulk consumers and concerns drought in top producing Maharashtra state may hurt production in the next season starting October 1. The most-active sugar contract for May delivery on India's National Commodity and Derivatives Exchange was 0.14 percent up at 2,960 rupees ($54.24) per 100 kg at 0934 GMT.
"This is peak demand season for sugar. Demand is improving in spot market, but at as soon as prices rise, millers are raising supplies," said Ashwini Bansod, a senior analyst at Phillip Commodities India Pvt Ltd. Demand for sugar from ice-cream and beverage makers typically rises during the summer. Spot sugar nudged up 3 rupees to 3,067 rupees per 100 kg in the Kolhapur market in top-producing Maharashtra state.
"Sugar can rise modestly in the next few weeks due to a drought in Maharashtra and summer-season demand. From June onwards monsoon season rainfall will start influencing the market," Bansod said. A severe drought in top sugar producing Maharashtra state has been affecting new plantation and is likely to affect on sugar production in the year starting from October 1, 2013.