By Carolyn Cui

Sugar futures edged lower Tuesday, even as speculation on a change in India's imports policy seemed to be gathering momentum again.

Raw sugar for May delivery fell 0.5% to 17.62 cents a pound on the ICE Futures U.S. exchange.

Early this year, the sugar market had seen an influx of new participants attracted by rising sugar prices and a bullish outlook for commodities in general. In particular, many believed that a fall in India's production would eventually force the government to lower import tariffs and allow more imports, boosting global sugar prices.

But in recent weeks, hopes dimmed for Indian imports as the India Sugar Mills Association lowered its estimate for consumption, leading some traders to question whether the government could fill the gap by tapping into the nation's sugar reserves. Some traders began to bet on prices falling in recent days. Sugar prices fell to their lowest levels in 10 months last week.

"India news and gossip concerning 'will they won't they' seems to be rising in decibels," wrote Tom Kujawa, co-head of softs department at Sucden Financial Ltd., in a note to clients on Tuesday.

Some market participants now expect the Indian government to reduce import duty, encourage imports directly, or come up with some other mechanism by asking the mills to start in September and build up domestic stocks quickly, he added.

Analysts expect sugar prices to become volatile again as the financial year ends on Friday and May contract expires soon.

In other markets, cocoa for May fell 0.6% to $2,137 a ton, arabica coffee for May dropped 0.7% to $1.3825 a pound, frozen concentrated orange juice for May was down 1.6% to $1.7215 a pound, and May cotton fell 0.2% to 76.79 cents a pound.

Write to Carolyn Cui at carolyn.cui@wsj.com

(END) Dow Jones Newswires

March 28, 2017 11:16 ET (15:16 GMT)

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