Aug 12 2009 5:49PM
MUMBAI, Aug 12 (Reuters) - Indian spot sugar prices eased on Wednesday as stockists slowed their purchases on a forecast of rain in growing areas but thin supplies and record prices in overseas markets limited the downside, traders said.
"Stockists have bought enough quantity in last two weeks. Now they are not in hurry to buy more," said a dealer based in Vashi spot market near Mumbai. "Forecast of rains also put pressure on prices."
In Kolhapur, a key market in top producer Maharashtra, the price of the most traded S-variety sugar edged down 0.47 percent to 2,947.15 rupees per 100 kg.
The spot price has risen 26.3 percent in August, while in 2009 it has jumped 60.3 percent.
Rains are expected in the next 48 hours and are likely to intensify thereafter in Uttar Pradesh, India's top cane producer, the India Meteorological Department (IMD) said on Wednesday in its forecast for the next five days. See [ID:nDEL110949]
The country's peak festival season runs from August-October, when demand for sugar goes up as people consume more sweets and confectioneries.
Traders estimate stocks at the beginning of the new season, including imported sugar, are likely to be 4 million tonnes, down from 10 million tonnes a year ago.
Higher global prices make imports expensive, preventing local prices from falling.
India's sugar output in 2009/10 is expected to reach 17 million tonnes, lower than the previously estimated 17.5-18.5 million tonnes, as erratic rains are likely to cut yields, a senior industry official said last week. See [ID:nBOM502476]
Traders forecast a 45 percent drop in India's sugar output to 14.7 million tonnes in the crop year to September.
India has extended its scheme to allow duty-free raw sugar imports until March and white sugar imports up to November
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