Indian sugar futures ended higher on Monday after the federal agriculture minister said the government would consider an increase in sugar buffer stocks.
MUMBAI: Indian sugar futures ended higher on Monday after the federal agriculture minister said the government would consider an increase in sugar buffer stocks, but weak fundamentals kept sentiments negative, analysts said.
The minister's statement has helped in arresting the slide in the futures market,; an analyst at Karvy Comtrade Ltd. said. But oversupply could not be ignored, she said. The government created a sugar buffer of 2 million tonnes in May to help contain sharp price fall due to oversupply.
The industry has been demanding creation of an additional 3 million tonnes of buffer to check price erosion. It is this increase the government has now agreed to consider.
On the National Commodity and Derivatives Exchange (NCDEX) the near-month contract rose 0.8 percent to close at 1,286 rupees per 100 kg. The July contract ended up 0.84 percent at 1,324 rupees.
"There was not much movement in the market today. Even the volumes were low, indicating an uncertainity in the direction," Ritesh Suthar, business development manager at Angel Commodities Pvt. Ltd. said.
The volumes in the June contract were down 26 percent at 10,910 while the volume for July contract were down 37 percent at 15,600 tonnes.
Spot prices rose 0.75 percent to 1,258 rupees per 100 kg in Kolhapur, Maharashtra, data from the NCDEX Web site showed.
"Additional sugar buffer of 3 million tonnes will help arrest price slide in the physical market," said Prakash Naiknavare, managing director, Maharashtra State Cooperative Sugar Factories Federation Ltd.
India, the world's second-largest sugar producer, is expected to produce a record 27 million tonnes of sugar in the year to September against its annual consumption of 19-20 million tonnes.
The country''s more than 400 mills have already produced nearly 26.5 million.
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