India sugar rises on hopes govt will give aid for exports.

Dec 27 - Indian sugar futures edged higher on Friday on expectations the government would provide incentives to mills to export raw sugar, though higher carry-forward stocks and a pick-up in cane crushing capped the upside.

The federal cabinet approved a scheme of interest-free loans to sugar mills, Food Minister K.V. Thomas said last week, as part of a bail-out package for beleaguered mills.

"Everyone in the industry has been expecting some kind of incentive from the government for raw sugar exports. That's why many mills are producing raw sugar instead of white," said an official with a sugar mill based in Satara, Maharashtra.

At 0937 GMT, the key January contract was up 0.21 percent at 2,799 rupees ($45.09) per 100 kg on the National Commodity and Derivatives Exchange.

Spot sugar was steady at 2,864 rupees per 100 kg at the Kolhapur market in Maharashtra.

Demand for sugar from bulk consumers like ice-cream and cold drink makers usually drops during the winter.

"Cane crushing is progressing well. The recovery rate is improving due to cold weather," the official said.

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.

Source : in.reuters.com