Sugar futures drop on weak demand, monsoon

Sugar futures fell on Monday on sluggish demand from bulk consumers and good rainfall in cane growing areas in western and southern states.

The key July contract on the National Commodity and Derivatives Exchange was down 0.64 per cent at 3,107 rupees ($53.85) per 100 kg at 0809 GMT.

“In last one week Maharashtra and Karnataka received ample rainfall. It is good for the crop’s vegetative growth,” said Prasoon Mathur, a senior analyst with Religare Commodities.

India’s key sugar cane producing western and southern states received ample rainfall in the first few days of the annual monsoon after nearly eight months of drought.

Spot sugar edged down 5 rupees to 3,057 rupees per 100 kg at the Kolhapur market in Maharashtra state.

“Mills were expecting state governments will float tenders in June to buy sugar. But so far buying from state governments is negligible,” said a Mumbai-based dealer.

Demand for sugar from ice-cream and beverage makers typically rises during the summer, but starts tapering off with the arrival of monsoon rains.

India is likely to produce 24.6 million tonnes of sugar in 2012-13, an industry body has said, against an annual demand of about 23 million tonnes.

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