Indian sugar futures eased on Thursday on profit-taking from their highest level in three and a half months; although a likely drop in next year's production and hopes of higher import duty limited the downside. The key July contract on the National Commodity and Derivatives Exchange was down 0.45 percent at 3,116 rupees ($53.94) per 100 kg at 0853 GMT, after rising to 3,150 rupees in the previous session, the highest since February 28.
"The government may impose duty to discourage imports. Already imports have slowed down due to a weak rupee. Higher duty may halt imports completely," said Prerna Sharma, an analyst at Emkay Commotrade Ltd. A weak rupee makes sugar imports expensive. The local currency was trading near its record low level on Thursday.
Sugar output in top-producing Maharashtra state is likely to fall by 25 percent year-on-year to 6 million tonnes in 2013/14 as drought reduced the acreage under the crop, a state official said. Spot sugar eased 3 rupees to 3,076 rupees per 100 kg at the Kolhapur market in Maharashtra state.