MUMBAI: Sugar futures edged higher on Tuesday on a slight improvement in spot demand and hopes that retail demand will improve significantly in the upcoming festive season. However, higher carryforward stocks and the forecast of surplus production in the next season weighed on sentiment. At 0855 GMT, the key September contract on the National Commodity and Derivatives Exchange was up 0.20 percent at 3,014 rupees ($49.29) per 100 kg. "Prices have dropped sharply in the last few weeks expecting higher supplies. In the coming days, the market will focus on demand. Prices will recover following an improvement in demand," said Prasoon Mathur, a senior analyst with New Delhi-based brokerage Religare Commodities. Spot sugar rose 6 rupees to 3,050 rupees per 100 kg at the Kolhapur market in Maharashtra state. A sharp drop in the rupee may help traders sign new export deals, dealers said. Last month, a lack of Pakistani Sugar available for exports and strong demand before Ramadan allowed India to sign exports deals. India is likely to produce 23.7 million tonnes of sugar in the 2013/14 marketing year beginning October, down 5.2 percent from a year earlier, but higher than the local demand of around 23 million tonnes. Maharashtra and Uttar Pradesh, the top two sugar producers in India, have received more rainfall than normal since the beginning of the monsoon on June 1, weather department data showed, boosting prospects of higher production.

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