Indian sugar futures fell on Monday as the new cane crushing season has swelled supplies when mills are saddled with mammoth stocks of the sweetener. At 1032 GMT, the key February contract was down 0.54 percent at 2,743 rupees ($44.62) per 100 kg on the National Commodity and Derivatives Exchange.
“Fundamentally, everyone knows that there are massive stocks of sugar all around and that’s the reason sugar is down,” said Mukesh Kuvadia, secretary of the Bombay Sugar Merchants Association.
India started the new sugar marketing year on October 1 with stocks of 8.8 million tonnes. It is expected to produce 25 million tonnes this year against a demand of 23 million tonnes.
The onset of cold weather is also likely to hit demand. Temperature has fallen below normal in some parts of the country, according to the weather department.
Demand for sugar from bulk consumers like ice-cream and cold-drink makers usually drops during the winter.
To cut down stocks of sugar, India will consider providing incentives for production of raw sugar up to 4 million tonnes for exports.
Spot sugar was down 24.40 rupees at 3,049.60 rupees per 100 kg at the Kolhapur market in Maharashtra.
India appears set to increase sugar exports to Asia and the Middle East if, as expected, the government extends production incentives to cash-strapped mills.