Indian sugar falls as stock limits raise supply

Indian sugar futures extended their losses on Friday after the government imposed limits on the amount of sugar that can be stocked by traders, a move which could boost supplies in the physical market.

The government on Thursday fixed a limit of 200 tonnes for sugar stocks held by dealers and directed them to sell supplies within 30 days of purchasing the commodity.

"The limits will force traders to dispose excess stocks, but buyers are not there in the market," said an analyst at Religare Commodities Ltd.

At 2:52 p.m. (0922 GMT), the March contract NSMH9 on the National Commodity and Derivatives Exchange was down 1.76 percent at 2,012 rupees ($38.9) per 100 kg, while the April contract NSMJ9 had fallen 1.29 percent to 2,072 rupees.

Spot prices in the western state of Maharashtra, India's top producer, fell 0.7 percent to 2,057.05 rupees.

"Raw sugar imports are weighing on sentiment," the Religare analyst added.

The government had last month allowed duty-free imports of raw sugar for domestic consumption, a move aimed at reining in prices ahead of general elections in April and May.

Trade and industry sources told Reuters on Thursday the government was keen to import 2 million tonnes of duty-free white sugar in the next six months and had sought the Election Commission's approval to go ahead. [ID:nDEL448372]

The farm minister said last month the country's output may be about 16.5 million tonnes, lower than earlier expectations of about 18 million tonnes and much below last year's about 26.5 million tonnes.

source: reuters