NEW DELHI – The government's subsidy of 62.7 bln rupees for sugar exports of 6 mln tn failed to lift the mood of the market today, following which prices of medium grade sugar were steady in all wholesale markets of the country, barring Kolhapur, traders said.

"Some movement is expected in markets once government announces the sale quota for mills for September," said an official at Bombay Sugar Merchants' Association.

Subsidy provided on exports will be 10.448 rupees per kg and will cover handling, upgrading and other processing costs, international and internal transport and freight charges on sugar limited to Maximum Admissible Export Quantity for the 2019-20 season, a government release said.

Despite the government's support measures, sugar prices are likely to remain under pressure because of surplus stocks in the domestic market.

"The operating margins and debt coverage metrics of mills are likely to remain under pressure given the sugar surplus situation and the recent leverage the mills have undergone in the form of various soft and interest subvention loans," an ICRA release said quoting Sabyasachi Majumdar, senior vice-president and group head at the rating agency.

Carryover stocks for the season starting October is seen at a record-high of 14.5 mln tn, according to Indian Sugar Mills Association.

Prices, however, were up by 25 rupees per 100 kg in Kolhapur, Maharashtra, because of higher demand from nearby states, traders said.

At 1831 IST, the most-active October contract of raw sugar on ICE Futures US was at 11.36 cents per pound, down 0.1% from the previous close.

International prices fell because of subsidies provided by New Delhi on sugar exports for the next season.

New sugar export subsidies announced by the Indian government on Wednesday are unsustainable and will only prolong the current cycle of low global sugar prices, Brazil's sugarcane industry association UNICA said.

"The potential for LQW (low quality white) exports by India displacing refined whites from elsewhere continues to hang over the market and diminish appetite by stand-alone refiners for raws imports. Added to the lack of nearby demand and a potential for another large October delivery in both markets which is keeping the structure negative, we don't see prospects of a strong rally anytime soon," Sucden Financial said in a report.

Following are today's prices for medium-grade sugar, in rupees per 100 kg, in key wholesale markets, and the change from the previous close: