Aug 27 2009 4:38PM
MUMBAI, Aug 27 (Reuters) - Indian spot sugar prices snapped a four-day losing streak on Thursday on monthly retail demand and dwindling stockpile, traders said.
In Kolhapur, a key market in top producer Maharashtra, the price of the most traded S-variety sugar rose 0.9 percent to 2,850 rupees ($58.3) per 100 kg.
"Stockists are buying to meet the monthly demand. Festivals are also lined up next month," said a trader based in Vashi spot market near Mumbai.
Wholesale traders stock up on food articles in the last and first week of the month to prepare for purchases by India's salaried middle class, who buy in the first two weeks of the month after receiving wages.
The country's peak festival season runs from August to October, when demand for sugar goes up as people consume more sweets and confectioneries.
India's sugar stocks will drop by three-quarters from a year earlier to 2.7 million tonnes on Oct. 1, when the new season begins, a leading industry official said on Tuesday.
The government had estimated last month the stock would be 3.5-4.0 million tonnes, down from 10 million tonnes at the beginning of the season last year.
"Stock limits are weighing on sentiment. Market is also waiting for September non-levy sugar quota," the trader said.
India has put stock limits for big companies, wholesale traders and retailers to curb the hoarding.
Non-levy, or free sale sugar, is sold by millers in the open market, but the quantity each mill can sell is fixed by the federal government on a monthly basis.
Trade forecasts a 45 percent drop in India's sugar output to 14.7 million tonnes in the crop year to September.
($1= 48.9 rupees)
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