India sugar at new high on supply deficit, demand

MUMBAI Jan 6 (Reuters) - Indian spot sugar price continued its gaining March into a seventh straight day to a fresh peak on Wednesday, bolstered by good demand, a production deficit and slower pace of refining raws, dealers said.

Indian sugar has made seven record highs in as many sessions.

In Kolhapur, a key market in top sugar producer Maharashtra, the price of the most traded S-variety sugar rose 1.4 percent to 3,873.6 rupees ($84.2) per 100 kg, breaching an earlier peak of 3,820 rupees on Tuesday.

The price has risen over 17 percent in eleven sessions.

"Bullish news is coming from every side. Production is down; overseas markets are hitting new highs. And processing of raw sugar is also not going well," said a trader based in Vashi market near Mumbai.

In the 2009/10 season, lower acreage and poor rains will keep India's output at 15.3 million tonnes, falling severely short of domestic consumption of about 23 million tonnes for a second straight year, a Reuters poll showed in October.

The northern state of Uttar Pradesh in November banned imports of raw sugar after farmers protested against imported sugar, which they said suppressed sugarcane prices and curtailed their bargaining power with mills.

The ban has locked up 1.5 million tonnes of raws in ports, and this could force the country to import one million tonnes of whites to meet domestic demand, a senior industry official said on Tuesday. See [ID:nMBI006156]

Indian buyers have stopped contracting new sugar import deals as local prices are lower than the landed cost of imports, Vinay Kumar, managing director of National Federation of Cooperative Sugar Factories, told reporters last month. See [ID:nSGE5BF06L]

Raw sugar futures nudged up in early trade on Wednesday and could soon test fresh 29-year peaks, supported by expectations of strong demand and tight supplies, dealers said. See [ID:nLDE6050KV]

($1= 46 rupees) (Reporting by Rajendra Jadhav; Editing by Harish Nabiar)