India sugar flat as extra quota offsets output woes

MUMBAI Aug 22 (Reuters) - Indian sugar futures were steady on Wednesday as sluggish demand in the physical market and additional supply of non-levy sugar outweighed concerns that poor rainfall in key cane-growing areas could hit output.

* The key September contract on the National Commodity & Derivatives Exchange was unchanged at 3,411 rupees ($61.5) per 100 kg at 1038 GMT.

* Sugar in the Kolhapur spot market in top-producing Maharashtra state fell 10 rupees to 3,426 rupees per 100 kg.

* "The supply situation is very comfortable due to the additional quota. Even if demand rises during the festival season, there would not be any shortage," said Ashok Jain, president of the Bombay Sugar Merchants Association.

* Earlier this month, India 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.

* There were concerns poor rainfall in Maharashtra, Uttar Pradesh and Karnataka states would likely trim the country's sugar production in the new crop season starting from October 1, dealers said.

* The Indian Sugar Mills Association (ISMA) estimates an output of 25 million tonnes in the new crop season.

* New York raw sugar futures edged higher in early trade on Wednesday after falling by more than 3 percent on Tuesday, in a sell-off ahead of expected bearish data on the pace of Brazil's harvest.

($1 = 55.5 Indian rupees) (Reporting by Rajendra Jadhav; Editing by Prateek Chatterjee)