Sugar futures on the National Commodity and Derivatives Exchange Ltd (NCDEX) opened marginally higher at Rs 3,375 a quintal on Wednesday against the previous close of Rs 3,374.

November contract made a high of Rs 3,389 and low of Rs 3,365. It was down marginally at Rs 3,371 at 1.30 pm.

The possibility of traders booking profit after a gain of three per cent in the last one week has restricted the sharp run-up in prices. Revival of demand during the festival season has supported prices at lower levels.

The Government is also considering tweaking the duty structure depending on the progress of crushing in the next three months. It may hike the import duty on white sugar and reduce the duty on raw sugar imports.

Crushing has started across Maharashtra and is expected to commence soon in UP too. The area under sugarcane is estimated at 52.88 lakh hectares for 2012-13 crop season, up from 50.99 lakh ha in the same period a year ago.

According to the first advance estimates by the Agriculture Ministry, sugarcane output is pegged at 335.3 mt, down six per cent compared with 357.6 mt last year.

Despite higher acreage, sugar production is estimated lower at 24 mt, down 2 mt compared to the current year.

Sugar futures may recover as demand is expected to emerge at lower levels. However, higher quota is seen offsetting the festive season demand which might cap sharp gains.

 

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