Indian sugar futures hit their contract low on Monday on surplus supplies and sluggish demand from bulk consumers, though hopes of summer season demand limited the downside. The key June contract on India's National Commodity and Derivatives Exchange was down 0.77 percent at 2,981 Indian rupees per 100 kg at 0916 GMT, after hitting a low of 2,971 rupees.
"Supplies have exceeded demand. We have higher local production and imports of over 1 million tonnes. But the demand is weak," said Ashok Jain, president of the Bombay Sugar Merchants Association. "Bulk consumers were expected to raise purchases due to summer season in the coming weeks. That can provide crucial support to prices," Jain said.
Demand for sugar from ice-cream and beverage makers typically rises during the summer. Spot sugar fell 5 rupees to 3,035 rupees per 100 kg in the Kolhapur market in the top-producing Maharashtra state. India is likely to produce 24.6 million tonnes of sugar in 2012-13, an industry body said, against an annual demand of about 23 million tonnes. India's sugar output eased 2 percent to 24.1 million tonnes in the first six-and-a-half months of the season that started on October 1, the Indian Sugar Mills Association said in a statement.