India sugar steady, eyes cane-crushing

MUMBAI, Nov 26 (Reuters) - Indian spot sugar price was steady on Thursday as lower production estimates and a rise in overseas markets offset sluggish domestic demand and a likely rise in supplies, dealers said.

In Kolhapur, a key market in top sugar producer Maharashtra, the price of the most traded S-variety sugar edged down 0.22 percent to 3,340.55 rupees ($72) per 100 kg.

"Supply situation is improving day by day. There is no panic buying, which we had seen a month back," said a member of the Bombay Sugar Merchants Association.

"Household demand is very weak. Many families had bought three-four months of their requirement earlier this month anticipating a price rise."

Most mills in top producer Maharashtra have begun operations and rest will do it by this month-end.

In the northern state of Uttar Pradesh, the second biggest producer, crushing is picking up momentum after sugar mills and farmers association agreed over cane procurement price.

U.S. raw sugar contract for March delivery on ICE SBH0 rose 0.24 cent to close at 22.32 cents a lb on Wednesday while March whites in London LSUH0 ended up $4.50 to close at $604 a tonne.

In the 2009/10 season, lower acreage and poor rains will keep India's output at 15.3 million tonnes, a little more than last year's output of 15 million tonnes, falling severely short of domestic consumption of about 23 million for a second straight year, a Reuters poll showed. See [ID:nBOM546431]

($1= 46.4 rupees)