MUMBAI: Sugar futures edged higher on Monday on an expected drop in the next year's production due to a drought and as traders signed export deals for July shipments.
Traders have signed deals to export 75,000 tonnes of white sugar in July, reversing an import trend after the rupee's depreciation and with strong demand in Gulf and African states due to the Islamic fasting month of Ramadan.
The key July contract on the National Commodity and Derivatives Exchange was up 0.33 percent at 3,003 rupees ($50.53) per 100 kg at 0856 GMT. It hit a low of 2,979 rupees last week, the lowest since May 20.
"Export deals changed sentiment. Mills are not interested in cutting prices. We can see moderate upside from the current level," said Prasoon Mathur, a senior analyst with Religare Commodities.
Spot sugar edged up 2 rupees to 3,059 rupees per 100 kg at the Kolhapur market in Maharashtra state.
New York raw sugar futures rose 0.6 percent on Monday.
Monsoon rains have covered the entire country a month ahead of schedule.
Demand for sugar from ice cream and beverage makers typically rises during the summer, but tapers off with the arrival of the monsoon.
Sugar output in top producing Maharashtra state is likely to fall by 25 percent year-on-year to 6 million tonnes in 2013/14 as the last year's drought reduced the acreage under the crop.
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.
