India sugar rises on demand; extra quota weighs

MUMBAI Aug 10 (Reuters) - Indian sugar futures extended gains on Friday as demand from stockists i mproved in the spot market, although allocation of additional non-levy quota for the September quarter weighed on sentiment.

* The key September contract on the National Commodity & Derivatives Exchange (NCDEX) was up 0.31 percent at 3,526 rupees per 100 kg at 1106 GMT.

* Sugar in the Kolhapur spot market in top producing Maharashtra state jumped 67 rupees to 3,570 rupees per 100 kg.

* "Demand is very good from eastern India. Stockists are buying in anticipation prices will rise in the coming weeks due to festivals," said a trader based in the Vashi spot market near Mumbai.

* "The market is also getting support from less rainfall in cane-growing areas, though additional quota for September is weighing on sentiment."

* India on Wednesday released 400,000 tonnes of additional non-levy sugar for the September quarter, over and above the previous allocation of 4.766 million tonnes.

* 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 quarterly basis.

* India is expected to have opening sugar stocks of 7 million tonnes in the new crop season from Oct. 1 as compared with 5.5 million tonnes a year ago, the Indian Sugar Mills Association (ISMA) said on Wednesday.

* ISMA forecast an output of 25 million tonnes for the crop season starting in October, but dealers say achieving this is nearly impossible due to the poor rainfall in Maharashtra and Uttar Pradesh.

* New York raw sugar futures firmed up on Friday, bouncing from the prior session's six-week low. (Reporting by Rajendra Jadhav; Editing by Prateek Chatterjee)