India spot sugar prices moved higher for the week to July 11, as domestic demand recovered, traders said.

India’s Ministry of Agriculture said the country’s sugarcane production for fiscal 2007-2008 is expected to decline by 4.21 percent to 340.56 million tonnes, while total foodgrain production has reached 230.67 million tonnes.

“As the production is expected to fall, we see sugar supply to slow down in the near future, though not immediately,” Mohan Gurnani, chairman of the Bombay Sugar Merchants Association said.

Prices are expected to go up in the coming week as we see better physical buying support, he added.

For the July-September quarter, the government decided to release 3 million tonnes of non-levy quota or free sale quota in the open market as against 3.6 million tonnes in the same quarter last year. The quota for July was fixed at 1.2 million tonnes.

The government may also allow sugar companies to sell their entire produce in the open market from the new crushing season starting Oct. 1, local newspapers suggest.

Currently, sugar mills are obliged to deliver 10 percent of their sugar produce as ‘levy’ to the public distribution system.

In Mumbai’s Vashi market on Friday, M-30 sugar pries rose to between 1,535 rupees and 1,625 rupees a quintal, compared with 1,514 rupees to 1,620 rupees a week earlier. One quintal equals 100 kgs.

Prices of the S-30 variety were quoted between 1,505 rupees and 1,540 rupees per quintal compared with 1,494 rupees to 1,525 rupees a week earlier.

Source: http://www.afxnews.com

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