Sugar ends lower on weak demand

Spot sugar prices on Tuesday closed lower on weak demand and selling pressure, dealers said. Taking cue from the spot markets, June sugar futures also ended lower. Higher output projections for the current year also dented sentiment, they said.

The NCDEX June contract closed Rs 16 lower at Rs 1,929 a quintal. Open interest declined to 26,040 lots from 28,100 lots a day earlier. "Most traders are exiting positions as they do not see any upside potential," said a Delhi-based dealer.

The June contract will face tough resistance at Rs 1,950 a quintal. Retail demand remained weak and stockists also remained on the sidelines, traders said.

"Stockists are waiting for prices to ease further before re-entering the market," said a Mumbai-based dealer.

There is also huge selling pressure as millers need to clear their monthly quota, dealers said. The June open market quota has been set at 1.3 million tonne compared with 1.1 million tonne allocated year ago.

Amid the weak demand, higher estimate for India's year to September sugar output at 19.5 million tonne has also dented prices, said Mukesh Kuvadia, joint secretary Bombay Sugar Merchants' Association.

Early estimates had pegged the year's output at 18.5 million tonne, which had been later revised to 19.1 million tonne.

India had produced about 13 million tonne sugar in 2004-05.