Sugar futures extended their gains on Friday on continued demand. Fears of a lower crop aided the rising trend.
Though the sugar mills’ association _ the body of private sugar mills in the country _ has projected production in the next season starting October at 26mt, traders are sceptical about the projections.
Though Uttar Pradesh has received sufficient rainfall, the sugarcane growing areas of Maharashtra and Tamil Nadu have received scanty rainfall.
According to the Agriculture Ministry, the area under sugarcane this year is 52.88 lakh hectares, against 50.59 lakh hectares last year.
The market seems to have overcome the shock of the Government releasing an additional 4 lakh tonnes of sugar for sale in the open market on Tuesday. The release came after retail prices increased to Rs 40 a kilo.
In view of the festival season ahead, traders expect demand to increase. Also, since prices had declined by Rs 200 a quintal between Monday and Wednesday, traders feel that sugar has been under-priced.
On the NCDEX, the August contract increased by Rs 61 to Rs 3,575 a quintal, while the September futures were up by Rs 25 at Rs 3,540. The October contract increased to Rs 3,585, a gain of Rs 21. Sugar for November and December delivery gained by about 1 per cent each.