MUMBAI: Sugar futures edged lower on Tuesday on concerns mills will not be able to sell the allocated quota for October and November and could be forced to cut prices to dispose of excess stocks after the Diwali festival. 

By 0955 GMT, the key November contract on National Commodity and Derivatives Exchange was down 0.5 percent at 3,370 rupees ($62.41) per 100 kg. 

Sugar was steady at 3,493 rupees per 100 kg at the Kolhapur spot market in the top-producing Maharashtra state. 

"Currently festival demand is supporting prices, but that will remain there for two weeks. After mid-November, demand will go down," said Ashok Jain, president of the Bombay Sugar Merchants Association. 

People will celebrate Diwali, or the festival of lights, in November, when demand for sugar goes up as the consumption of sweets rises. 

"The quota for October and November is higher than the demand. It may force mills to sell sugar at a lower price in the second half of November," Jain said. 

The government has asked millers to sell 4 million tonnes of sugar in the open market during October and November, higher than the average monthly allocation of around 1.7 million tonnes. 

Sugar output in the 2012/13 crop year, which started on Oct. 1, is likely to fall to 23.5-24 million tonnes from 26 million tonnes a year earlier.