MUMBAI: Sugar futures rose more than one percent to their highest in two weeks on Wednesday because of an improvement in retail demand due to festivals, though higher supplies for October and November capped the upside.
By 0935 GMT, the key November contract on the National Commodity and Derivatives Exchange was up 0.8 percent at 3,401 rupees ($62.93) per 100 kg. The contract earlier rose to 3,415 rupees, the highest since Oct. 19.
Sugar nudged down a rupee to 3,489 rupees per 100 kg at the Kolhapur spot market in the top producing Maharashtra state.
"Retail demand is improving due to Diwali. Mills in Maharashtra are getting good orders from eastern and northern states," said a member of the Bombay Sugar Merchants Association.
People will celebrate Diwali, or the festival of lights, in November, when demand for sugar goes up as the consumption of sweets rises.
The government has asked millers to sell 4 million tonnes of sugar in the open market during October and November, higher than the average monthly allocation of around 1.7 million tonnes.
Sugar output in the 2012/13 crop year, which started on Oct. 1, is likely to fall to 23.5-24 million tonnes from 26 million tonnes a year earlier.
