India sugar edges higher on demand, crushing delay

MUMBAI, Sept 17 (Reuters) - Indian sugar futures edged higher on Monday on expectations of a rise in retail demand in the next two months due to festivals and a delay in cane crushing in the key producing region.

* The key October contract on India's National Commodity and Derivatives Exchange was up 0.25 percent at 3,610 rupees per 100 kg by 1049 GMT.

* "Millers are keeping prices steady despite the higher quota and are managing to sell sugar without any cut in prices," said Harakhchand Vora, vice-president of the Bombay Sugar Merchants Association.

"Wholesale demand was steady, but retail improved due to the Ganesh festival," he said.

* Indians celebrate the Ganesh festival this month, which will be followed by Dussehra in October and Diwali in November. Sugar consumption usually rises during the festival period.

* In August, 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.

* The western state of Maharashtra, the country's top sugar producer, has decided to start crushing for the 2012/13 season from Nov. 1, instead of Oct. 1, as cane has not developed well due to water shortage.

* In the Kolhapur spot market in Maharashtra, sugar edged down 5 rupees to 3,638 rupees per 100 kg.

* India's sugar output in 2012/13 is expected to fall to 24 million tonnes, from an earlier estimate of 25 million tonnes, the Indian Sugar Mills' Association (ISMA) said earlier this month. (Reporting by Rajendra Jadhav; Editing by Anupama Dwivedi)