Indian sugar futures were treading water on Monday as ample supply and sluggish demand due to a drop in temperature offset expectations that the government would provide incentives to mills to produce raw sugar.
* At 0926 GMT, the key February contract was unchanged at 2,789 rupees per 100 kg on the National Commodity and Derivatives Exchange.
* "There would be further reduction in demand from the organised sector due to cold weather. Some mills might be forced to give discounts," said Ashwini Bansod, a senior analyst at Phillip Commodities India Pvt Ltd.
* Temperature has fallen below normal level in most parts of the country, the weather department said on Monday.
* Demand for sugar from bulk consumers like ice-cream and cold drink makers usually drops during the winter.
* Spot sugar was up 5 rupees at 2,862 rupees per 100 kg at the Kolhapur market in Maharashtra.
* "The government policy to induce mills to produce raw sugar can support prices in the longer term. It can ultimately trim supply of white sugar in the local market," Bansod said.
* The government is likely to announce incentives for raw sugar production this week, dealers said.
* The federal cabinet approved a scheme of interest-free loans to sugar mills, Food Minister K.V. Thomas said earlier this month, as part of a bail-out package for beleaguered mills.
* India started the new sugar marketing year on Oct. 1 with carry-forward stocks of 8.8 million tonnes. It is expected to produce 25 million tonnes this year against a demand of 23 million tonnes.
