MUMBAI: Sugar futures edged higher on Wednesday on bargain buying, driven by hopes the government would raise duty on imports of the sweetener, but sluggish demand capped the upside.
As of 2:37 P.M the January sugar contract on National Commodity and Derivatives Exchange was up 0.52 percent at Rs 3,280 rupees per 100 kg.
"Imports of white sugar are putting pressure on prices. The government may raise import duty to protect local mills," said a Mumbai-based dealer.
"The government will try to support sugar prices. Sugar production costs have risen due to an increase in cane price," the dealer said.
Government is expected to decide on raising the import duty on the sweetener by year-end, Food Minister K.V. Thomas said on December 13, as lower prices in the world market made room for such imports in the past two months.
Pakistan has allowed another 500,000 tonnes of sugar exports, bringing the total to 1.2 million so far this year, as it seeks to generate foreign exchange for state coffers and revenue for cash-strapped mills.
Sugar mills in key producing states agreed to raise cane procurement prices by more than 15 percent for 2012/13 season started on October 1.
Sugar eased by Rs 4 to Rs 3,280 per 100 kg at the Kolhapur spot market in the top-producing Maharashtra state.
Demand for sugar from bulk consumers like cool drink and ice cream makers usually drops in India during the winter season.
Indian sugar mills produced 4.9 million tonnes between October 1 and Decemeber 15, up 2 percent from a year earlier.
