Indian sugar snaps 4-day gaining streak on weak demand

MUMBAI, Nov 19 (Reuters) - Indian spot sugar snapped a four-day winning streak on Thursday on a slight drop in demand and hopes the federal government will resolve the cane price dispute in northern Uttar Pradesh state, dealers said.

In Kolhapur, a key market in top sugar producer Maharashtra, the price of the most traded S-variety sugar fell 0.5 percent to 3,385.65 rupees per 100 kg. The price has risen 84 percent in 2009.

"Demand has tapered due to higher prices," said a member of the Bombay Sugar Merchants Association. "I think very soon mills in Uttar Pradesh will begin crushing. The government has been discussing the issue with all stakeholders."

Thousands of Indian farmers protesting low state-controlled sugarcane prices forced the postponement of the first day of the parliamentary winter session on Thursday, highlighting rural discontent over government policy. See [ID:nSP490330]

Sugar price has risen over six percent in last fortnight on tight supplies due to a delay in cane crushing and lower output estimate.

Southern and western part of the country had received unseasonal rains last week, which trimmed pace of crushing. But now crushing is picking up momentum, traders said.

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]

(Reporting by Rajendra Jadhav; Editing by Sunil Nair)